SINGAPORE. Markets in Indonesia could come under more pressure on Friday after Moody's lowered the nation's credit rating outlook, the latest jolt in a turbulent start to the year for Southeast Asia's largest economy.

Moody's said on Thursday it had cut Indonesia's credit rating outlook to negative from stable, citing reduced predictability in policymaking days after MSCI flagged transparency issues that triggered a market rout of more than $80 billion.

Indonesia's chief economic minister Airlangga Hartarto downplayed the step, saying ratings agencies and global financial markets were "yet to understand"  the country's new growth strategy.

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The focus will be on the rupiah, which remains pinned near the record low of 16,985 per U.S. dollar it touched late last month on worries about central bank independence. It is down nearly 1% for the year.

The benchmark Jakarta Composite Index, which closed 0.5% lower on Thursday, has fallen 2.7% for the week thus far and was on track to extend last week's 6.9% decline.

"The Moody's outlook downgrade is a warning shot, which could trigger other ratings agencies to follow suit, particularly if the nature of policymaking remains subject to a heightened degree of uncertainty," said economists at OCBC in a note.

"The responses of the authorities will be watched even more closely, as credible policy choices remain a necessity to avert a credit ratings downgrade over the course of the next twelve to eighteen months."

Indonesia's international bonds slipped on Thursday following the Moody's announcement. Longer dated dollar-denominated bonds eased between 0.3-0.5 cents, with many trading at their weakest level in five months, Tradeweb data showed.

Selling Pressure Remains

The rout in Indonesia's stock market has thrust the $ 1.4 trillion economy back under the spotlight â??as investors grow increasingly concerned about policy uncertainty under President Prabowo Subianto, including a widening fiscal deficit and central bank independence.

Vows from officials to make changes and the resignations of five top officials from the financial regulator and stock exchange have failed to stabilise the market, which continues to see outflows.

Foreigners sold a net of around $860 million worth of shares since last Wednesday, exchange data showed. They sold $1 billion worth of shares in 2025.

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