FX.co ★ Rupiah Faces Pressure from Moody’s Outlook Cut, GDP Miss, and Firm Dollar

On Friday, the Indonesian rupiah edged closer to IDR 16,880 per dollar, nearing last month’s historic low of 16,985. Market sentiment soured after Moody’s downgraded Indonesia’s credit rating outlook to negative from stable on Thursday, pointing to a decline in policy predictability. This development came on the heels of MSCI’s warning about transparency issues, which previously prompted a significant market selloff surpassing USD 80 billion. The rating agency expressed concerns about policy effectiveness and weakening governance, warning that prolonged deterioration could undermine Indonesia’s long-standing credibility. On the domestic front, GDP growth reached 5.11% in 2025, falling short of the government’s target of 5.2%, despite strong momentum in Q4. This outcome supports expectations that Bank Indonesia might have room to further ease policy this year. In contrast, foreign exchange reserves declined in December from a nine-month high, reducing the external buffer. On the global stage, the dollar index hit a two-week high as widespread selloffs in risk assets boosted demand for safe-haven investments.