Jakarta. Hashim Djojohadikusumo, the younger brother of President Prabowo Subianto, warned Thursday that the rupiah could weaken to as much as Rp 21,000 against the US dollar if index provider MSCI downgrades the country's stock market classification, potentially triggering a wave of foreign capital outflows.

The rupiah stood at Rp 18,128 per dollar on Thursday, according to Bank Indonesia's Jakarta Interbank Spot Dollar Rate (Jisdor), the central bank's reference exchange rate.

Hashim said a downgrade of Indonesia's equity market classification from emerging market to standalone market could prompt foreign investors to withdraw funds from Indonesian equities, putting additional pressure on the currency.

"If foreign investment flows out of our companies, the rupiah could weaken further. Based on my calculations, it could reach Rp 20,000 to Rp 21,000 per dollar," Hashim said during a meeting with executives of the Indonesian Chamber of Commerce and Industry (Kadin) in Jakarta.

Hashim did not elaborate on how he calculated the projected exchange-rate range or specify the conditions under which the rupiah might reach those levels.

At Rp 21,000 per dollar, the rupiah would be approximately 13.7% weaker than Thursday's reference rate in terms of its dollar value.

Hashim, who serves as the president's special envoy for climate and energy, urged authorities and market participants to address concerns raised by MSCI to maintain foreign investor confidence in Indonesia's capital markets.

He warned that further currency depreciation would increase the rupiah-denominated cost of servicing foreign-currency debt, potentially creating broader economic risks.

Hashim also called for an immediate end to stock market manipulation, including coordinated trading practices that he said had undermined investor confidence.

He argued that such practices were among the concerns affecting foreign investors' perceptions of the Indonesian market and could worsen the consequences of a potential downgrade.

"I ask my colleagues at Kadin to put an end to manipulative activities of this kind. I strongly urge you to do so because the government is determined to take firm action," he said.

Hashim stressed the need for preventive measures to address the issues highlighted by MSCI before they further undermine market stability and confidence in the rupiah.

"We must mitigate this MSCI warning. The president has assigned me, together with [Investment Minister] Rosan Roeslani, to help ensure that the capital market does not spiral out of control this year," he said.

"We must not allow 32.7 million Indonesian citizens to become dissatisfied with this situation."

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