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View all search resultsThe International Monetary Fund and foreign investors see Indonesia as one of the world’s “bright spots” with strong economic fundamentals and resilience, despite the country’s vulnerability to global economic turmoil, according to Bank Indonesia.
Due to the reemergence of oil prices as a key determinant amid the Iran war, monetary authorities facing renewed inflation risks are becoming less likely to cut interest rates, keeping global borrowing costs elevated and tightening financial conditions across both advanced and emerging economies.
With the rupiah continuing to weaken amid an oil and gas shock linked to the United States-Israeli war on Iran, Bank Indonesia (BI) has halved the threshold for monthly purchases of US dollars (USD) using rupiah. The move is intended to give the central bank more room to intervene in the currency market and safeguard foreign exchange reserves, particularly as pressures intensify from ongoing oil and gas supply disruptions. However, the policy may carry unintended consequences for the real economy.
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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