Antara News·Indonesia·Friday, October 23, 2026 at 11:34 AM UTC

Bank Indonesia says rupiah remains manageable after MSCI market shock

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Rizka Khaerunnisa, Yashinta Difa

To help cushion the impact of foreign capital outflows, the central bank also increased incentives for Domestic Non-Deliverable Forward (DNDF) hedging instruments.

Jakarta (ANTARA) - Bank Indonesia (BI) has assured markets that fluctuations in the rupiah exchange rate remain manageable following market turbulence triggered by MSCI's proposal to reclassify the Indonesian stock market.

"So far, the situation remains manageable. Exchange rate movements have not been excessive," said Erwin Gunawan Hutapea, head of BI's Monetary and Securities Asset Management Department, on Friday.

The central bank's reassurance followed an announcement by Morgan Stanley Capital International (MSCI) on October 15 proposing to reclassify Republic of Indonesia from an emerging market to a standalone market.

The announcement rattled domestic financial markets. On Friday, October 16, the Jakarta Composite Index (JCI), known locally as the Indeks Harga Saham Gabungan (IHSG), fell 11.57 percent, while the rupiah weakened to Rp18,052 per US dollar, according to the Jakarta Interbank Spot Dollar Rate (JISDOR).

Although BI acknowledged capital outflows from the stock market, government securities (SBN), and Bank Indonesia Rupiah Securities (SRBI), Erwin said the central bank maintained adequate rupiah liquidity to support financial market transactions.

He added that BI stood ready to intervene if imbalances between foreign exchange supply and demand pushed market volatility beyond acceptable limits.

At its October 20–21, 2026, Board of Governors meeting, BI kept its benchmark BI Rate unchanged at 5.75 percent. It also maintained the lending facility rate at 6.5 percent while raising the deposit facility rate by 25 basis points to 5.0 percent.

To help cushion the impact of foreign capital outflows, the central bank also increased several incentives for Domestic Non-Deliverable Forward (DNDF) hedging instruments.

The premium reduction was raised from 25 percent to 40 percent for six-month tenors and from 30 percent to 45 percent for 12-month tenors. The measures aim to encourage foreign capital inflows and support rupiah stability.

Speaking at a press conference on Wednesday, October 21, BI Governor Destry Damayanti said the central bank remained vigilant regarding risks in the domestic stock market. She added that pressure on the rupiah remained within manageable limits despite broader regional economic headwinds.

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