Bank Indonesia is under increasing pressure to raise interest rates on Wednesday, as global index provider MSCI warned it may downgrade the country's stock market from emerging-market to standalone status. This threat has triggered a rout in Indonesian stocks and weakened the rupiah.

Citibank now expects a pre-emptive 50 basis-point increase to 6.25%, while Capital Economics and Permata Bank anticipate a 25 basis-point hike to 6%. The central bank has maintained its benchmark seven-day reverse repurchase rate at 5.75% since June. The rupiah weakened to 18,030 per dollar on Tuesday, nearing its June record low and falling approximately 8% this year. Analysts warn that not delivering a rate hike would risk disappointing investors and fueling further currency depreciation.