Jakarta. Rupiah weakened further against the US dollar on Thursday, hovering near its weakest level in more than two months despite Bank Indonesia's surprise interest rate hike, as investors remained cautious ahead of a key MSCI review on Indonesia's market status.

Bloomberg data showed the rupiah closed at Rp 17,794 per US dollar in the spot market at 2:59 p.m. Jakarta time, down 32 points, or 0.18%, from the previous session.

Currency analyst Ibrahim Assuaibi said Indonesian financial markets remain under pressure amid heightened volatility as investors adopt a wait-and-see approach.

"Market participants are closely watching not only the outcome of Bank Indonesia's policy meeting, but also MSCI's upcoming decision on whether Indonesia will retain its emerging market status and whether the freeze on index constituent changes will be lifted," Ibrahim said.

Earlier in the day, Bank Indonesia raised its benchmark seven-day reverse repo rate by 25 basis points to 5.75%, stepping up efforts to stabilize the rupiah amid persistent external pressures.

The central bank also increased the deposit facility rate by 25 basis points to 4.75% and the lending facility rate by 25 basis points to 6.50%. The decision was announced following Bank Indonesia's Board of Governors Meeting on June 18.

Other major currencies traded against the rupiah at Thursday's close were the Singapore dollar at Rp 13,823, the Japanese yen at Rp 110.68, the Australian dollar at Rp 12,476, and the euro at Rp 20,493.

“For Friday's trading session, it is projected that the rupiah would remain volatile and could weaken further, moving within a range of Rp 17,790 to Rp 17,840 per US dollar” Ibrahim said.