Indonesian Rupiah Exchange Rate Drops... 16,500,000 Rupiah per 1 Dollar
President-Elect Prabowo Subianto Aims to Raise National Debt from 30% to 50%
Despite the recent decline of the Indonesian Rupiah to its lowest level in over four years, the Bank Indonesia (BI) has decided to keep the benchmark interest rate unchanged.
According to Yonhap News and major foreign media on the 20th (local time), BI held the 7-day reverse repurchase agreement (RRP) rate, which serves as the benchmark interest rate, steady at 6.25% following its monetary policy meeting. BI had raised the benchmark rate by 0.25 percentage points from 6.0% to 6.25% in April to defend the exchange rate and has kept it unchanged for two consecutive months since then.
Ahead of this monetary policy meeting, most financial market experts predicted that BI would maintain the current interest rate.
However, some speculated that a rate hike might be announced to defend the exchange rate, given the recent sharp depreciation of the Rupiah against the US dollar.
Recently, the Indonesian Rupiah has weakened to nearly 16,500 Rupiah per US dollar, marking its lowest level since April 2020 when the economy was severely impacted by the COVID-19 pandemic, and the weakness continues.
In response, Perry Warjiyo, Governor of BI, told reporters after the meeting, "The Rupiah remains at a manageable level and is moving in line with policy responses."
Nevertheless, experts express concerns that the Rupiah could depreciate further. The recent decline is attributed to the global strength of the US dollar combined with growing uncertainties over the new government's fiscal policies.
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