FX.co ★ Rupiah Firms as BI Holds Rates

The Indonesian rupiah appreciated to approximately 16,700 on Wednesday afternoon, breaking a streak of six consecutive sessions of decline. This uptick followed the central bank's decision to maintain its benchmark interest rate at 4.75%, a move that was widely anticipated. The central bank's stance indicates confidence in keeping inflation within its targeted range of 2-1/2±1% for both this year and the next. Additionally, steps are being taken to stabilize the currency amid ongoing global volatility and to enhance policy effectiveness. This decision to hold the rate comes after an October pause, following a cumulative 150 basis points reduction over the previous year aimed at bolstering economic growth. President Prabowo Subianto is targeting an increase in economic growth to 8% during his administration, up from the pre-pandemic level of around 5%. Despite this recent strengthening, the rupiah has depreciated approximately 3.8% against the U.S. dollar this year. Bank Indonesia Governor Perry Warjiyo mentioned that there remains potential for further rate cuts, but emphasized that any future changes will be contingent on economic data. On the global front, the U.S. dollar index was steady near 99.6, with diminishing prospects for an imminent Federal Reserve rate cut, as persistent inflation continues to pose challenges. Meanwhile, traders are anticipating crucial U.S. economic data releases.