Indonesia’s Central Bank To "Act Boldly" To Maintain Rupiah Stability

Bank Indonesia (BI) will “act boldly” to stabilize the rupiah by intervening in the spot market, domestic non-deliverable forwards, and the bond market after the currency hit a record low against the U.S. dollar, Stefanno Sulaiman reported for Reuters.

BI will announce the results of its next two-day policy meeting on April 23. I Photo: Rochelmit

BI’s Senior Deputy Governor Destry Damayanti said that movements in the domestic bond market indicated continued investor confidence in Indonesian sovereign debt.

According to LSEG data, the rupiah hit an all-time low of 16,970 per dollar before recovering slightly. Damayanti attributed the weakness in regional currencies to the intensifying global trade war.

“This was triggered by President Trump's sudden decision to increase tariffs on Chinese products by 104%,” she said, emphasizing that Indonesia’s economy remains resilient.

It marked the second consecutive day the rupiah reached new lows, as Indonesian markets felt the aftershocks of the U.S. tariff hikes upon reopening after a long holiday.

Maybank Indonesia economist Myrdal Gunarto said BI has limited room to cut interest rates despite low inflation, as the central bank prioritizes rupiah stability.

“BI seems focused on maintaining domestic economic performance by protecting the rupiah from potential capital outflows during this unfavorable global economic period,” he said.

BI will announce the results of its next two-day policy meeting on April 23. Last month, the bank held its benchmark interest rate at 5.75% to keep inflation within target, stabilize the rupiah, and support growth.

Indonesian Employers Association chairwoman Shinta Kamdani said businesses are worried the record-low rupiah will worsen economic conditions already strained by Trump's 32% tariffs on Indonesian goods.

To cope, many businesses are now holding off on non-essential purchases, especially imports, she said.

The Indonesian government has stated it will not retaliate against U.S. tariffs but will pursue negotiations.

A high-level delegation, led by Chief Economic Minister Airlangga Hartarto and joined by Finance Minister Sri Mulyani Indrawati and Foreign Minister Sugiono, is set to travel to the U.S. for talks.