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View all search resultsBI hikes rate yet again to stabilize rupiah
The central bank has lifted the benchmark interest rate three times in short succession to curb the rupiah’s slide.
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Bank Indonesia Governor Perry Warjiyo speaks to reporters after a meeting with the House of Representatives budget committee in Jakarta on June 9, 2026. (Antara/Rizka Khaerunnisa)
B
ank Indonesia (BI) has increased the benchmark interest rate again to attract more capital inflows and prop up the rupiah. The move is part of a set of measures that include tighter capital controls and higher bond yields.
Following the central bank’s monthly two-day policy meeting, BI Governor Perry Warjiyo announced in a press conference on Thursday that the BI Rate was raised by 25 basis points (bps) to 5.75 percent.
The increase was a “pre-emptive” measure to stabilize the rupiah, said Perry, expressing confidence that the currency would “become stronger going forward” and “stabilize toward its fundamental [value]”.
BI had increased the BI Rate in last month’s board of governors’ meeting by a stronger-than-expected 50 bps and then followed up with another 25-bps hike outside of the monthly schedule on June 9, after the rupiah had hit an all-time low near 18,200 per United States dollar.
Together with Thursday’s decision, that means the key interest rate has risen by one percentage point within a month, yet the rupiah has recovered only slightly and was trading at 17,867 per dollar on Thursday afternoon.
An interest rate hike makes rupiah-denominated assets more attractive in the eyes of global investors and therefore encourages capital inflows that strengthen the local currency.
To ensure global investor interest in its government bonds by offsetting the higher perceived risk, Indonesia, like other emerging markets, seeks to keep its interest rates above those offered in the US and other developed economies.
