Bank Indonesia's Stability Focus Likely to Support Rupiah

Dow Jones
Yesterday

0447 GMT - Bank Indonesia's stability-first approach should remain the main anchor for the rupiah, supporting a gradual recovery, say RHB analysts Muhamad Farid Anas bin Johari and Wong Xian Yong in a note. Improving domestic conditions, easing liquidity pressures and stronger investor confidence should support the currency. Portfolio flows remain a key catalyst, with the November MSCI review particularly important. Recent improvements in ownership disclosure and free float rules could address concerns over market transparency and investability, while foreign equity flows have started to stabilize. However, the outlook could remain vulnerable to renewed dollar strength, elevated oil prices and an unfavourable MSCI review, which could trigger foreign outflows. The rupiah is forecast at 17,600 by end-3Q, 17,550 by end-2026 and around 17,450 by end-2Q27. The dollar is last flat at 17,646.74 rupiah.

 

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