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View all search resultsBI holds rate but banks on other way to help rupiah
Bank Indonesia (BI) has kept the benchmark interest rate unchanged in its latest monetary policy meeting as it resorts to an alternative strategy to buttress the rupiah by incentivizing capital inflows.
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Bank Indonesia Governor Perry Warjiyo (second right), Coordinating Minister for Economic Affairs Airlangga Hartarto (right), Finance Minister Purbaya Yudhi Sadewa (second left) and Financial Services Authority (OJK) chief Friderica Widyasarin deliver a press statement after a meeting with President Prabowo Subianto on May 5 at the Merdeka Palace in Jakarta. (Antara/Galih Pradipta)
B
ank Indonesia (BI) has kept the benchmark interest rate unchanged while resorting to an alternative strategy to buttress the rupiah through foreign capital inflows.
Following the central bank’s monthly two-day policy meeting, BI Governor Perry Warjiyo announced in a press conference on Wednesday that the BI Rate was kept at 5.75 percent, where it has been since the last rate decision.
The central bank "believes that the rupiah exchange rate will stabilize and tend to strengthen” moving forward, he said.
The decision marks the end of a hiking streak that began with a 50 basis point (bps) increase in May and was followed by two more hikes of 25 bps each in June.
The monetary tightening was aimed at halting a slide of the rupiah that accelerated since the Iran War began in late February and sent the currency to new all-time lows in the following months.
The rapid weakening only stopped when BI announced a 25 bps rate hike on June 8, outside of its monthly schedule, which was followed by another hike at the board meeting the following week.
The rupiah has been moving between the high end of 17,800 per US dollar and topped out at Rp 18,100 late last month. It flatlined around 17,900 per dollar on Wednesday, still far weaker than the 16,500 level assumed in the state budget as the average for this year.
