Rupiah May Stay Weak Amid External Risks and Domestic Doubts
Kenanga economists say the Indonesian rupiah could keep weakening on external risks and domestic uncertainty, Market Talk reports.
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what happened
According to economists at Kenanga, cited in a research note reported by Market Talk, the Indonesian rupiah could stay under pressure due to external risks and domestic uncertainty. A possible downgrade of Indonesia in the MSCI index and stronger external headwinds could trigger further outflows from foreign funds, hitting the currency and local financial markets.
The analysts believe Bank Indonesia prefers targeted currency support and liquidity measures over interest-rate hikes, in order to protect growth. However, further rupiah depreciation could push the central bank to raise rates to defend currency stability. Kenanga also raised its end-2026 dollar-to-rupiah forecast to 17,900 from 17,500. The dollar currently trades flat at 18,075 rupiah.
why it matters
For markets, this signals higher risk for Indonesian assets, as capital outflows weigh on the currency, local stocks and bonds. A possible tightening of monetary policy would be an important factor for investors in the country's debt market.
market impact
Rupiah and Indonesian assets: capital outflows and MSCI downgrade risk pressure the currency
tags
instruments
sources
- Indonesian Rupiah Could Remain Under Pressure — Market Talk, 23 October 2026 at 01:10 UTC
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