Jakarta. Indonesia's rupiah recovered against the US dollar on Thursday after briefly weakening toward the Rp 18,000 level, although analysts said concerns over fiscal risks, investor sentiment and global market conditions continue to weigh on the currency.

The rupiah strengthened by 23 points, or 0.13%, to Rp 17,928 per dollar in midday trading, according to Bloomberg data. Earlier in the day, the currency had opened 11 points lower at Rp 17,963 per dollar.

The rebound came after renewed pressure on the Indonesian currency following concerns raised by global index provider MSCI about Indonesia's capital market transparency and investor protections.

Rully Nova, an analyst at Bank Woori Bersaudara, said the rupiah remains vulnerable as US Treasury yields stay elevated despite easing inflation expectations in the United States and moderating oil prices.

"Offshore non-deliverable forward (NDF) rates for the rupiah have already exceeded Rp 18,050 per dollar," Rully said. He estimated the rupiah would trade in a range of Rp 17,930 to Rp 17,990 during Thursday's session.

According to Rully, domestic factors have also contributed to the currency's weakness.

"Fiscal uncertainty, negative perceptions arising from MSCI's assessment and the deterioration of Indonesia's sovereign credit default swap (CDS) spreads to above 90 basis points have prompted investors to avoid Indonesian financial markets," he said.

The rupiah came under pressure after MSCI released its 2026 Market Classification Review on Wednesday, highlighting concerns over shareholder transparency and coordinated trading practices in the equity markets of Indonesia and Turkey.

MSCI said market participants had expressed significant concerns about the investability of Indonesia's equity market because of those issues, although the country retained its emerging market status.

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