MSCI Flags Indonesia's Forex Market in Accessibility Review

Morgan Stanley Capital International (MSCI) has assigned a negative rating to Indonesia’s foreign exchange market liberalisation indicator, unchanged from its previous review. This was revealed in the 2026 Global Market Accessibility Review. Foreign exchange market liberalisation is one of the aspects the institution assesses regarding the ease of capital inflows and outflows.

“There is no efficient offshore foreign exchange market and there are constraints on the onshore foreign exchange market (for example, forex transactions must be linked to securities transactions),” MSCI stated in its report released on Friday, 19 June 2026.

Overall, MSCI evaluates five criteria: openness to foreign investors, ease of capital inflows and outflows, efficiency of the operational framework, availability of investment instruments, and stability of the institutional framework. For the operational framework efficiency criterion, MSCI gave a negative rating for information flow. This rating declined from the previous year.

Paramadina University economist Wijayanto Samirin assessed that MSCI’s concerns emerged as a response to Bank Indonesia’s (BI) increasingly restrictive foreign exchange transaction policies. Most recently, BI tightened the purchase of foreign exchange without underlying documents to US$10,000 per entity per month, with the aim of strengthening the rupiah exchange rate. This policy takes effect from 1 July 2026.

Since the beginning of the year, BI has continuously tightened the threshold for forex purchases from the original US$100,000 to US$50,000, then to US$25,000. “This policy keeps changing, three times this year alone, and is becoming more restrictive. Then the policy regarding export proceeds also forms the background to MSCI’s concerns,” Wijayanto said when contacted on Friday, 19 June 2026.

Wijayanto also highlighted how the central bank’s policies are moving towards exchange controls, which is one of the hallmarks of a frontier market. He fears that when a country’s market is not connected to global markets, its investability value becomes low.

Furthermore, he argued that various recent Indonesian policies tend to be unfriendly to markets and investors. “If we do not change our mindset, our capital and money markets will slowly die, becoming a ‘zombie market’. It appears alive, but is actually dead and has no economic role,” he said.