Rupiah Edges Higher After BI Vows Stronger Currency Support

The Indonesian rupiah hovered near IDR 18,060 per U.S. dollar on Thursday, firming slightly after touching above IDR 18,100 the previous day, as the greenback weakened after the U.S. Federal Reserve left interest rates unchanged while three voting members dissented in favor of a hike, underscoring divisions within the central bank. Locally, Bank Indonesia moved to calm markets following Governor Perry Warjiyo's sudden exit, pledging stronger stabilisation efforts. The central bank stressed its reliance on a broad policy mix beyond interest rates, including spot FX intervention, onshore and offshore non-deliverable forwards (NDFs), and issuance of BI rupiah-denominated securities, known as SRBI, to manage liquidity and attract foreign inflows. BI said these measures complement the total of 100bps rate hikes since May. Traders now turn to key domestic releases next week, including July inflation, May trade data, and Q2 GDP, for fresh signals on the economic outlook and the policy path.

The Indonesian rupiah hovered around IDR 18,090 per U.S. dollar on Wednesday, remaining under strain from policy uncertainty following the sudden exit of Perry Warjiyo as central bank governor. Local reports suggested his departure followed a major dispute with the finance minister over growth strategies, though whether the disagreement directly triggered his resignation is unclear. The president’s spokesperson denied speculation of government pressure. Some economists said a permanent appointment for the new chief is expected within the next two months, with markets likely to stay cautious until the successor is formally named. Bank Indonesia raised rates by a total of 100bps since May to shore up the currency and attract foreign inflows. Yet the rupiah has still slipped about 8% so far this year, extending losses from the past two years. Globally, the U.S. dollar index steadied ahead of the Fed’s policy decision later today, with markets broadly expecting rates to stay unchanged.

The Indonesian rupiah slid toward IDR 18,100 per dollar on Tuesday, marking a second day of losses as the greenback stayed firm ahead of the Fed’s policy decision later this week. Domestically, sentiment was unsettled after Governor Perry Warjiyo resigned, with Senior Deputy Destry Damayanti stepping in as acting chief until a permanent successor is named. The leadership change comes at a fragile moment, with fiscal strains, doubts over the government’s agenda, and fading foreign investor confidence weighing on Indonesian assets. Concerns over central bank independence also lingered after President Prabowo appointed his nephew to the BI’s board. Traders now look to the upcoming securities auctions for signals of the central bank’s resolve to aid the rupiah. Last week, the board surprised markets by holding its key rate at 5.75%, despite expectations for another hike following 100bps of tightening since May. The rupiah has lost near 8% this year, ranking among Asia’s weakest currencies.