Rupiah Could Weaken Further If MSCI Downgrades Indonesia
RBC's Abbas Keshvani says the rupiah may slide further if MSCI reclassifies Indonesia as standalone, a move that could trigger about $5 billion of outflows.
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what happened
Abbas Keshvani at RBC Capital Markets, in a commentary cited by Market Talk, says the Indonesian rupiah could weaken further if MSCI Inc. moves the country from the emerging-market category to standalone. He estimates such a reclassification would lead to roughly $5 billion of outflows.
RBC remains bearish on the currency, since Indonesia depends on portfolio flows to fund its current account deficit. Keshvani expects weak demand in both equities and debt. At the time of the report, the dollar was 0.2% lower at 17,995 rupiah.
why it matters
Two factors matter for markets here: a possible MSCI decision and Indonesia's reliance on foreign financing. If the classification changes, index-tracking funds could be forced to reduce holdings of Indonesian assets, adding pressure on the currency and bonds.
market impact
Rupiah and Indonesian assets: possible outflows of about $5 billion pressure the currency and market
tags
instruments
sources
- Indonesian Rupiah Likely to Weaken Further — Market Talk, 20 October 2026 at 06:36 UTC
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