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View all search resultsBI keeps rate on hold as Iran war pressures rupiah
Bank Indonesia (BI) has left its benchmark interest rate unchanged as the United States-Israel war on Iran puts pressure on the rupiah, prompting the central bank to respond with forex market intervention and tighter foreign exchange controls.
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A screenshot shows Bank Indonesia (BI) Governor Perry Warjiyo in a live-streamed press conference on Sept. 17, 2025, where he presented the results of the central bank's monthly monetary policy meeting in Jakarta. (JP/Maudey Khalisha)
B
ank Indonesia (BI) has left its benchmark interest rate, the BI Rate, unchanged as the war involving the United States, Israel and Iran puts pressure on the rupiah, prompting the central bank to respond with foreign exchange market interventions and tighter foreign exchange controls.
Following the central bank’s two-day monthly policy meeting, BI Governor Perry Warjiyo announced at a press conference on Tuesday that the BI Rate would remain at 4.75 percent, where it has stood since last September.
“We are no longer conveying the possibility of an interest rate cut, which we have omitted in this statement, because we are likely to keep the BI Rate unchanged to reinforce interventions and ensure adequate foreign exchange reserves, and we will evaluate [our policy] in accordance with the dynamics going forward,” Perry said.
Monetary policy will now be “directed mainly toward stability,” as the war had weakened the rupiah and triggered capital outflows from emerging markets, the governor announced, adding that “Indonesia is no exception.”
He revealed that portfolio investment in the first two weeks of March showed a net outflow of US$1.1 billion. The rupiah was trading just below Rp 17,000 per US dollar on Tuesday afternoon after having showed no marked reaction to BI’s announcement, which was in line with several analysts’ expectations.
This level is close to the historic low of Rp 17,300 per dollar recorded during the Asian Financial Crisis of 1997–1998, which brought the country to the brink of default.
BI has actively intervened in the market to prevent the rupiah’s depreciation from spiraling out of control. Perry said such measures would continue “around the clock,” even during the upcoming Idul Fitri holiday when domestic markets are closed, through the offshore forex market.
