EMERGING MARKETS-Indonesian stocks resume plunge after trading halt; Asian currencies rise

By Nichiket Sunil

Jan 28 (Reuters) - Indonesian stocks were on pace for their biggest one-day drop in more than 14 years on Wednesday after MSCI warned of a possible downgrade to frontier status, while currencies in emerging Asian economies advanced as the dollar struggled near a four-year low.

The Jakarta Composite Index .JKSE tumbled 8% in afternoon trade, triggering an automatic trading halt designed to manage extreme volatility.

Trading resumed after 30 minutes, and the index was last down 8.3%, lingering near its three-month low and on track for its worst day since September 2011.

MSCI's move to freeze Indonesian stocks from entering or growing in its indexes and warning on transparency issues exacerbates existing concerns around a weak rupiah, a widening fiscal deficit, and the central bank's autonomy.

Foreign investors sold 13.96 trillion rupiah ($834.43 million) worth of Indonesian stocks in 2025 and the selloff has continued in January, according to LSEG-compiled data.

"The (MSCI) announcement underscores persistent foreign investor concerns over ownership transparency and price discovery in Indonesia," said Andrey Wijaya, head of research with RHB Indonesia.

"Without clearer visibility on ultimate beneficial ownership and concentration, valuation re-rating is likely to stay constrained despite improving corporate fundamentals."

Meanwhile, Asian currencies gained as the U.S. dollar traded near its four-year low after President Donald Trump brushed off its recent weakness, exacerbating greenback selling. USD/

The Malaysian ringgit MYR= appreciated 1% to hit its highest point since May 2018, gaining 3.4% in the past six sessions.

"The AI boom, fiscal consolidation and strong growth are among the idiosyncratic factors that keep up the strong sentiment towards the MYR and back its outperformance relative to other peer currencies," Maybank FX analysts said in a note.

Thailand's baht THB=TH pared gains to trade at 30.935 per dollar after the central bank governor said the country would set a cap on daily gold trading to curb the overvalued currency's strength.

A stronger baht threatens Thailand's export-dependent economy, which has also been pressured by global trade tensions and domestic problems.

In South Korea, stocks .KS11 notched a record closing high after Trump said the United States and South Korea would work out a solution following his threat to hike tariffs. The won KRW=KFTC rose 0.9% to a three-month high.

Market focus is now on the Federal Reserve's policy decision due later in the day, where the central bank is expected to stand pat on rates.

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