TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Indonesia hikes rates again to reverse rupiah slump
Change text size
Gift Premium Articles
to Anyone
Share the best of The Jakarta Post with friends, family, or colleagues. As a subscriber, you can gift 3 to 5 articles each month that anyone can read—no subscription needed!
Bank Indonesia raised its key rate to 5.25 percent from 4.75 percent. The rupiah has slid more than five percent against the dollar this year to below 14,000 -- its lowest level since 2015. (Antara/Sigid Kurniawan)
I
ndonesia's central bank on Friday raised interest rates for the third time in six weeks as it moves to shield the rupiah from a selloff in emerging market currencies.
Bank Indonesia raised its key rate to 5.25 percent from 4.75 percent.
The rupiah has slid more than five percent against the dollar this year to below 14,000 -- its lowest level since 2015.
Rising US interest rates are prompting investors to sell the rupiah and other currencies to buy dollar-denominated assets in search of better returns.
"The rate increase comes against a backdrop of continued weak economic growth and subdued inflation, and clearly indicates the main focus of the central bank is boosting the rupiah," said Gareth Leather, senior Asia economist at research house Capital Economics.
While the latest move may offer respite to the depreciating currency, raising borrowing costs could stifle efforts to boost the economy's sluggish growth rates.
In a bid to rev up Southeast Asia's biggest economy, the central bank had been repeatedly slashing borrowing costs over the past year and a half until it reversed course in May.
Indonesia is targeting annual growth of seven percent, but the commodities-driven economy has remained stuck in the 5.0 percent range.
