Indonesia Raises Rates in Surprise Move to Prop up Sinking Rupiah
Economists had expected no change, but the central bank said the move would help attract foreign inflows and keep inflation within target.
- On Tuesday, Bank Indonesia unexpectedly raised the benchmark interest rate by 25 basis points to 5.5% in an off-cycle move to stabilize the rupiah, which had fallen to record lows.
- Inflation rose to 3.08% in May, exceeding the 2.97% forecast, prompting BI to act after the rupiah weakened more than expected since its last meeting.
- Indonesia's forex reserves dropped by $1.3 billion in May to $144.9 billion, while the Jakarta Composite tumbled over 35% this year as investors fled equity markets.
- BI Governor Perry Warjiyo told reporters to "please wait for next week" regarding further hikes, while Barclays analysts projected another 25 basis point increase is possible.
- The central bank aims to maintain inflation between 1.5% and 3.5% through 2027, with Warjiyo projecting the rupiah to stabilize between 16,800 and 17,500 to the dollar while enhancing yields to attract foreign investment.
16 Articles
16 Articles
Bad timing for Indonesia to be living dangerously again
Bank Indonesia’s off‑cycle rate hike on June 9 underscored just how alarmed policymakers are about the trajectory of Southeast Asia’s largest economy. It also serves as an early warning to the rest of the world about the financial and economic storm clouds gathering over emerging markets. BI’s 25‑basis‑point increase, which lifted the benchmark rate to […] The post Bad timing for Indonesia to be living dangerously again appeared first on Asia Ti…
Movements are part of efforts to stabilize rupee in the midst of increased global volatility resulting from the Middle East conflict
Indonesia raises rates in surprise move to support sinking rupiah
Indonesia May Hike Rate Again to Shield Currency, Analysts Say
Indonesia may raise interest rate again to shield the rupiah and curb market volatility, according to analysts, after the central bank’s surprise tightening on Tuesday helped the currency rebound from record lows and boosted stocks.
Channel News Asia
The Star Kuala LumpurIndonesia raises rates in surprise move to prop up sinking rupiah
The rupiah has been under pressure due to a wide range of investor worries, including President Prabowo Subianto's big spending plans and a ballooning fuel subsidy budget following the Iran war.
Coverage Details
Bias Distribution
- 45% of the sources lean Left
Factuality
To view factuality data please Upgrade to Premium
