Bank Indonesia increases rates by 25 basis points in June: Will it defend the Rupiah?

Bank Indonesia (BI) decided to hike the benchmark interest rate by 25 basis points to 5.75% on June 18, from the previous 5.5%. The decision aligned with the market expectations.

The Indonesian Rupiah (IDR) receives support against the US Dollar (USD) as an immediate reaction to the BI interest rate decision. The USD/IDR is trading around 17,820 at the time of writing.

BI Governor Perry Warjiyo's key quotes

• Inflation remains under control.
• Rupiah is seen stabilising, with a tendency to strengthen going forward.
• 2026 GDP outlook is seen in the range of +4.9% to +5.7%, unchanged.
• Rupiah has strengthened, supported by Bank Indonesia's stabilisation measures.
• Has increased the intensity of currency interventions to defend the rupiah.
• We have raised SRBI rates to attract foreign capital inflows.
• Outstanding SRBI rupiah notes at 1,021.1 trillion rupiah, with non-resident investors holding 238.1 trillion rupiah as of mid-June.