Bank Indonesia sees rupiah swings as contained after MSCI proposal
The central bank reported adequate rupiah liquidity despite outflows from shares and securities, and expanded incentives for currency hedging.
Rupiah movements have stayed within manageable bounds despite the turmoil following MSCI’s proposed reclassification of Indonesia’s equity market, Bank Indonesia (BI) said. The central bank also reported sufficient liquidity for rupiah transactions, even as foreign capital flowed out.
MSCI proposed on October 15 that Indonesia move to standalone status rather than remain an emerging market. The Jakarta Composite Index subsequently lost 11.57 per cent on October 16. The Jakarta Interbank Spot Dollar Rate recorded the rupiah at Rp18,052 per US dollar.
Erwin Gunawan Hutapea, who heads BI’s Monetary and Securities Asset Management Department, said currency fluctuations had not been excessive. Intervention remained an option if a mismatch in foreign-exchange demand and supply drove volatility beyond acceptable bounds, he said.
BI acknowledged that capital had left equities, government securities and Bank Indonesia Rupiah Securities. It strengthened incentives for hedging through Domestic Non-Deliverable Forward instruments, with the aim of drawing foreign funds and helping stabilise the rupiah.
The premium reduction for six-month tenors increased to 40 per cent, compared with 25 per cent previously. For 12-month tenors, it became 45 per cent instead of 30 per cent.
At the October 20–21, 2026 meeting of its Board of Governors, BI left the benchmark BI Rate at 5.75 per cent and its lending facility rate at 6.5 per cent. The deposit facility rate rose 25 basis points to 5.0 per cent.
