Indonesian rupiah hits record low amid MSCI downgrade concerns

The Indonesian rupiah plunged to a record low on Thursday, as the US dollar surged and fears mounted over the possibility of being excluded from MSCI Inc.'s emerging-market indexes. The rupiah's exchange rate against the dollar peaked at 18,242.4, a record high, surpassing its previous high of 18,190 set in early June. MSCI revealed on Wednesday that it would remove one Indonesian firm, Barito Pacific, from its global index, while Bumi Resources Minerals would be transferred from the main index to a smaller cap index.

This decision followed a warning from MSCI in October that Indonesian stocks could be removed from its indexes next year, potentially relegating the market to frontier status. The rupiah has emerged as Asia's worst-performing currency this year, and the Jakarta Composite Index has lost more than 40% of its value in 2026, making it the world's worst-performing major stock market.

The decline was primarily driven by a mass exodus of foreign investors. Despite Jakarta's efforts to comply with MSCI's demand for market reforms, there are doubts about whether the government can implement these changes in time to halt the currency's downward spiral.