Indonesian Rupiah Hits All-Time Low Amid Outflow Risks

The Indonesian rupiah fell to an all-time low of 18,204 per dollar on November 12, surpassing the previous record of 18,190 set in June. The currency has declined more than 8% against the dollar this year, making it the worst-performing currency in Asia.

Market pressure stems from a strengthening U.S. dollar as investors expect the Federal Reserve System to resume interest rate hikes next month. Additionally, MSCI Inc. proposed reclassifying Indonesia as a standalone market because of investability concerns. Goldman Sachs Group Inc. estimates this move could trigger approximately $5.6 billion in passive outflows.

Further volatility is driven by high oil prices that increase government subsidy costs, general policy uncertainty, and the risk of a sovereign rating downgrade. Bank Indonesia stated it is monitoring capital outflows and remains vigilant regarding these market developments.