FX.co ★ Rupiah Eases Ahead of MSCI Review

The Indonesian rupiah hovered around IDR 17,830 per U.S. dollar on Monday, after briefly strengthening to below IDR 17,700 in the previous session. The move came as the U.S. dollar index traded near a 13‑month high, following the Federal Reserve’s decision last week to leave interest rates unchanged while maintaining a hawkish policy stance.

Domestically, sentiment remained cautious ahead of MSCI’s review later this week on whether Indonesia will be downgraded to frontier market status. The index provider last week cut Indonesia’s Information Flow accessibility rating, citing concerns over transparency, free-float visibility, and price discovery.

Downward pressure on the rupiah was partly contained by Bank Indonesia’s tightening measures, including a total of 100 basis points of rate hikes since May and stricter foreign exchange regulations, effective July 1, aimed at stemming capital outflows.

On the fiscal side, tax revenues posted strong growth in May, reflecting the government’s push for greater fiscal discipline. Measures include reducing funding for the Free Meal Program and suspending it during holiday periods.