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Rupiah firms after Bank Indonesia holds rates at 5.75%
USD/IDR stays near 17,960 as BI’s targeted steps to draw foreign inflows offset dollar pressure from a weakening US economy.
FXStreet reports USD/IDR was little changed in Asian trading, moving around 17,960 after posting small gains the prior day, with the Indonesian rupiah strengthening following Bank Indonesia’s surprise decision to hold its benchmark rate at 5.75%. Rather than increase borrowing costs, Governor Perry Warjiyo introduced targeted measures aimed at attracting foreign inflows and stabilizing the currency.
The pair also held its ground as a weakening US economy weighed on the dollar, although expectations for the Federal Reserve to keep rates unchanged were tempered by uncertainty around shifting policy views and unclear guidance from new Fed Chair Kevin Warsh.
FXStreet added that while the downside for the US dollar could be restrained by safe-haven demand linked to Middle East tensions, those geopolitical risks intensified after US President Donald Trump threatened to strike Iranian infrastructure if Tehran targets ships transiting the Strait of Hormuz.
The conflict backdrop escalated further as Iran vowed retaliation and Iran-backed Houthi militants launched missile and drone attacks on two Saudi oil tankers in the Red Sea, which FXStreet said marked the first direct strikes on tankers in the waterway.