The Indonesian rupiah hovered near IDR 18,000 per U.S. dollar on Wednesday, rebounding from an intraday low of IDR 18,060 after Bank Indonesia left its benchmark interest rate unchanged at 5.75% for the fourth consecutive month. In a bid to stabilize the currency amid a market selloff triggered by an MSCI warning on Indonesia’s market status, the central bank raised its deposit facility rate by 25 basis points to 5% and enhanced incentives for domestic non-deliverable forward (DNDF) hedging to attract foreign capital.
At the same time, to strengthen domestic liquidity, the board lowered the reserve requirement ratio by 1 percentage point to 8% effective November 1, with a further cut to 7% from December 1. This move is expected to inject around IDR 190 trillion into the financial system. Governor Destry Damayanti noted that the cumulative 100-basis-point rate hikes implemented earlier this year have helped anchor inflation expectations. Internationally, the U.S. dollar index steadied after hitting a three-week low, supported by rising oil prices that reignited inflation concerns and bolstered safe-haven demand for the greenback.
