Indonesia holds rate after rupiah slides

Bank Indonesia held its benchmark interest rate unchanged and said it’s focused on currency stability, with the central bank chief seeking to reassure markets about its autonomy despite possible changes in senior leadership.

- GRACE SIHOMBING

The BI-Rate was kept at 4.75% for a fourth straight month yesterday as expected by all 32 economists surveyed by Bloomberg News. Governor Perry Warjiyo said that the central bank’s current policy focus is the currency, and that it would heighten intervention measures to stabilise and even strengthen the rupiah.

“BI will not hesitate to carry out large-scale interventions” in both onshore and offshore non-deliverable forwards, as well as the spot and bond markets, Mr Warjiyo said in a briefing. Indonesia has more than enough foreign-exchange reserves, and slightly smaller current-account deficits pencilled in for 2025 and 2026, he added.

The rupiah reversed an earlier loss and closed 0.1% stronger versus dollar. The benchmark 10-year government bond yield was steady at 6.34%, while stocks were down 1.4%.

Mr Warjiyo’s latest messaging should help assuage investor concerns that the nomination of President Prabowo Subianto's nephew as BI deputy governor would pressure the monetary authority to do more to support economic growth, even at the cost of currency stability.