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Rupiah rises as Bank Indonesia prioritizes currency stability
Bank Indonesia kept its benchmark rate at 5.75% for a second straight month while reiterating a 2.5% plus or minus 1% inflation target for 2026-2027.
The Indonesian rupiah strengthened against the US dollar for a second day, with USD/IDR trading around 17,810 in Asian hours Thursday, as Bank Indonesia leaned into a renewed focus on currency stability, according to FXStreet.
In its first policy meeting under acting Governor Destry Damayanti, the central bank held its benchmark interest rate steady at 5.75% for the second consecutive month, signaling policy continuity after a 100-basis-point tightening cycle that started in May.
Bank Indonesia said its strategy will prioritize stabilizing the rupiah to help contain imported inflation, while also using targeted liquidity measures to cushion domestic growth, with officials emphasizing rupiah stability amid global financial market volatility.
FXStreet also pointed to external pressure on the USD/IDR outlook, noting the US dollar’s support from hawkish Federal Reserve messaging in July FOMC meeting minutes, and added that heightened risk aversion tied to geopolitical friction near the Strait of Hormuz has also been favoring the greenback.