Rupiah's 80th anniversary comes amid record low and MSCI scrutiny

Currency losses and central bank intervention

Government offices marked Hari Oeang with ceremonies and banners, but market figures offered a stark contrast. Bloomberg data put the rupiah's Oct. 28 close at its weakest ever. By Oct. 29, its year-to-date decline against the dollar had reached 8.03 percent, the largest in Asia, according to Asian Bonds Online.

Dollar strength and high oil prices account for some of the pressure. Two other regional net oil importers also recorded currency losses: the Philippine peso was down 7.67 percent for the year, while the Thai baht had fallen 6.64 percent. Jakarta Globe reported that oil remained above $115 a barrel amid uncertainty over the Middle East conflict.

Bank Indonesia said its efforts to stabilize the rupiah included spot foreign exchange transactions, offshore non-deliverable forwards and domestic non-deliverable forwards, alongside government bond purchases in the secondary market. Jakarta Globe also reported a 1.15 percent monthly decline in the currency and foreign exchange reserves of $146.3 billion at the end of September 2026.

In a Jakarta Post opinion article, Anum Intan Maulidi argued that the anniversary should draw attention to confidence in the economy and institutions supporting the currency. Writing as a student, Maulidi described the depreciation in terms of laptop prices, higher costs of applying to study abroad and uncertainty about entering the job market.

Foreign outflows and changes to the stock benchmark

Indonesia's equity market faced pressure of its own. On Oct. 16, net foreign sell orders totaled Rp 3.34 trillion ($185.2 million), bringing foreign outflows for the year to a record Rp 88.19 trillion, according to stock market records cited by The Jakarta Post. That cumulative figure exceeded the full-year outflows of Rp 53.84 trillion during the 2020 coronavirus pandemic and Rp 50.17 trillion during the 2008 global financial crisis.

The Indonesia Stock Exchange (IDX) announced plans to remove stocks classified as having high shareholding concentration from the calculation of the IDX Composite. President director Jeffrey Hendrik said the category covered 80 stocks representing roughly 18 percent of the benchmark's total weighting. Those shares would still be available for trading, but changes in their prices would no longer move the index.

Samuel Sekuritas estimated that the exclusion could bring the benchmark to 5,925 points. Its projection represented an 18.6 percent increase from the multi-year low of 4,997 recorded at the close on Oct. 19, 2026.

Concerns about governance also featured in an earlier sovereign credit assessment. In March 2026, Fitch Ratings changed the outlook on Indonesia's BBB rating from stable to negative. A Fitch sovereigns director cited risks to policy credibility, fiscal discipline and capital market governance as policymaking authority became more centralized.

MSCI weighs standalone status

MSCI opened a consultation on Oct. 15, 2026, proposing to move the MSCI Indonesia Indexes from Emerging Market to Standalone Market status, without an intermediate move to the frontier category. The index provider identified structural shortcomings, including suspected coordinated trading and what it described as an apparent lack of meaningful enforcement of market rules.

The proposal followed a June warning. MSCI had said it would consider opening a reclassification consultation if sufficient progress was not evident by the November 2026 Index Review. Restrictions on certain index changes for Indonesian securities were already in place before the October consultation began.

MSCI said those restrictions would remain throughout the consultation. It will not increase Foreign Inclusion Factors (FIF) or Number of Shares (NOS), add securities to the MSCI Indonesia Investable Market Index (IMI), or move securities into larger size-segment indexes.

No reclassification decision has been finalized. MSCI has said it intends to proceed unless the public consultation demonstrates material improvements in market governance. Market participants have until April 30, 2027, to submit feedback, with a final decision due on or before June 30, 2027.