Indonesian Rupiah: Seen above 18,000 at end of 2026 against dollar – DBS

DBS Group Research’s Philip Wee has revised higher his USD/IDR projections, now expecting the pair to end 2026 slightly above 18,000 versus 16,500 previously. The change reflects unresolved investor concerns over Indonesia’s fiscal discipline and equity market transparency, recent outlook downgrades by Moody’s and Fitch, and MSCI’s ongoing review that could see Indonesia downgraded to Frontier Market status.

Rupiah pressured by ratings and reforms

"We have revised our forecasts for USD/IDR, now projecting to end 2026 slightly above 18,000, up from our previous estimate of 16,500."

"Indonesia is still in the process of damage control and has yet to fully address investor concerns regarding fiscal discipline and equity market transparency."

"Despite these warnings, the House of Representatives directed Bank Indonesia to steer USD/IDR lower to meet the average 16,500 level assumed in the 2026 State Budget."

"BI responded on May 20 with a surprise 50-bps rate hike to 5.25%, which did not prevent USD/IDR from closing May at a fresh high of 17,881."

"While Indonesian regulators have responded with reforms to strengthen market credibility, integrity, and transparency, MSCI has extended its review into June to determine whether to downgrade the country to “Frontier Market” from “Emerging Market” status."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)