Indonesian Rupiah: MSCI risks deepen pressure against US Dollar - OCBC

OCBC’s Sim Moh Siong and Christopher Wong remain mildly cautious on the Indonesian Rupiah (IDR) as MSCI reclassification uncertainty, foreign equity selling, elevated oil prices and a firm US Dollar weigh on the currency. Investors seek credible enforcement of market reforms, while a sustained recovery hinges on stabilising portfolio flows. USD/IDR retains an upside bias, although overbought RSI readings warrant monitoring for a technical turnaround.

MSCI and Oil risks cap Rupiah

"IDR remained under pressure amid lingering uncertainty over MSCI’s proposed reclassification of Indonesia to standalone status. The JCI fell sharply earlier this week, accompanied by foreign equity selling, before recovering modestly yesterday. The IDX’s latest measures to address concerns over market transparency and trading practices have yet to restore investor confidence. Meanwhile, elevated oil prices continue to weigh on IDR, adding to an already challenging external backdrop."

"We retain a mildly cautious bias on IDR. While the authorities have taken steps to address MSCI’s concerns, investors will likely want to see credible enforcement before reassessing their exposure."

"More importantly, we would watch whether continued foreign equity selling spills over more materially onto government bonds, particularly as elevated oil prices and a firm USD leave IDR vulnerable to renewed pressure. For now, some easing in oil prices and a pullback in USD could offer respite, but a more convincing IDR recovery would require signs that portfolio flows are stabilising."

"USD/IDR last closed at 18183. Bullish momentum on daily chart intact while RSI rose to overbought conditions. While upside bias remains intact, we continue to look for signs of any technical turnaround as the pair approaches its prior high. Resistance at 18190 (2026 high), 18450 levels. Support at 18000, 17972 (21 DMA)."

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