Bank Indonesia Keeps Interest Rate at 6.25% Amid Faltering Rupiah

By Jose Resurreccion

Jun 20, 2024 04:45 AM EDT

Bank Indonesia Keeps Interest Rate at 6.25% Amid Faltering Rupiah
A Bank Indonesia logo is displayed on a gate in Jakarta on February 4, 2011.
(Photo : ROMEO GACAD/AFP via Getty Images)

Bank Indonesia announced Thursday (June 20) that its seven-day reverse repo rate was maintained at 6.25% for a second month in a row. 

Nikkei reported that the country's central bank previously raised the policy rate to 6.25% in April to stabilize the rupiah after hitting a four-year low that month. 

However, its current position as the worst currency in the region and its continued devaluing is not helping it recover.

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Keeping Interest Rates Amid Faltering Rupiah 

As of Thursday, the rupiah fell to 16,425 per US dollar, which was the lowest the currency fell into since April 2020, when it came under heavy selling pressure due to the COVID-19 pandemic. 

Despite this, the inflation rate stayed within the bank's inflation target range of 1.5% to 3.5% for 2024. 

Bloomberg quoted Bank Indonesia Governor Perry Warjiyo when he said that the rupiah remains manageable, adding that its movements were in line with its policy responses.

Another factor that influenced the trend, which also affected other central banks in the Asia-Pacific region, was the US Federal Reserve's rate hikes, which began in early 2022. 

Aside from Indonesia, the Thai and Malaysian central banks kept their interest rates unchanged at 2.5% and 3%, respectively.

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