Rupiah Strengthens After Bank Indonesia Tightens Policy Aggressively

USDIDR +0.27% USDIDR.TV +0.12% USDIDR +0.09% The Indonesian rupiah firmed to around IDR 17,600 per U.S. dollar on Wednesday afternoon after the central bank delivered a larger-than-expected interest-rate hike to reinforce its defense of the currency, which had recently fallen to successive record lows. Bank Indonesia raised borrowing costs by 50bps to 5.25%, marking its first rate increase since 2022. The benchmark rate had been kept at 4.75% since October. The move came as authorities sought to curb mounting pressure on the rupiah amid persistent capital outflows, widening fiscal concerns, dividend repatriation, and rising inflation risks linked to escalating tensions in the Middle East. Monetary authorities have already intensified interventions in both spot and non-deliverable forward (NDF) markets while introducing measures to restore market confidence and limit further currency volatility. Governor Perry Warjiyo signaled policymakers would prioritize stability, with growth support to come through macroprudential measures.