(Bloomberg) -- Indonesia’s fiscal policy and a stronger dollar pose risks to investing in its stocks, strategists at Morgan Stanley wrote in a note while lowering their recommendation. 

“We see near-term uncertainty over the direction of future fiscal policy stance as well as some weakness in the FX market amid still high US rates and a firm US dollar outlook,” strategists including Daniel Blake wrote in the June 10 note. They downgraded the country’s equities to “underweight” in the firm’s Asian and emerging market allocation. 

Indonesian President-elect Prabowo Subianto’s campaign pledges — such as the proposal for government provision of lunches and milk for students — may impose a “substantial fiscal burden,” while Indonesia’s earnings outlook has also deteriorated, they wrote. 

Morgan Stanley’s change of stance comes as a gauge of the dollar has started trending higher ahead of the Federal Reserve’s rate decision on Wednesday and Bank Indonesia’s decision next week. 

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