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View all search resultsBI governor announces policy shift as rupiah slides
In a House or Representatives hearing on Monday, Bank Indonesia (BI) Governor Perry Warjiyo said “we believe” the rupiah will end up averaging around Rp 16,800 per United States dollar, within the Rp 16,500 to Rp 16,900 target range set in the 2026 state budget.
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An employees shows rupiah and US dollar banknotes at a Bank Mandiri Syariah branch in Jakarta in this undated photo. (Antara/Nova Wahyudi)
B
ank Indonesia (BI) has stressed the need for a shift toward a pro-stability stance after the rupiah plunged to historic lows amid global and domestic economic headwinds.
In a hearing with House or Representatives Commission XI, which oversees financial affairs, BI Governor Perry Warjiyo said “we believe” the rupiah will end up averaging around Rp 16,800 per United States dollar, within the Rp 16,500 to Rp 16,900 target range set in the 2026 state budget.
“With such a global situation, monetary policy can no longer be pro-growth, it has to come back to stability, because [BI’s] mandate is to maintain stability, Pak chairman,” Perry said on Monday, addressing the commission’s head.
The rupiah has been on a downward slope since the United States and Israel launched a war against Iran in late February and by the end of April had breached its historic low of Rp 17,300 per dollar recorded during the Asian Financial Crisis in 1998.
The currency depreciated further this month to hit a new low around Rp 17,680 per dollar on Monday.
Perry attributed the recent weakening to a lower probability of further interest rate cuts by the US Federal Reserve due to high inflation, alongside a high US fiscal deficit, which pushed up short and long-term yields of US Treasuries, making dollar-denominated assets more attractive and prompting investors to move funds from emerging markets like Indonesia to the US.
The Malaysian ringgit, Philippine peso and Indian rupee have found themselves under the same external pressure as the rupiah. The Thai baht is also down since the start of the year but bucked the trend by strengthened on Monday.
