The Indonesian rupiah traded around IDR 16,975 per dollar on Tuesday afternoon, after briefly touching an intraday low of 17,000. The move followed Bank Indonesia’s decision to leave its key interest rate unchanged at 4.75%, in line with market expectations, as the escalating conflict in the Middle East heightens risks to the economic outlook. Rising energy prices have stoked fears of an inflation shock, particularly for Indonesia, which relies heavily on imported oil from the region and has limited protection against potential supply disruptions.
Governor Perry Warjiyo said the rate decision reflects the central bank’s efforts to support the rupiah and keep inflation within its target range, noting that the conflict has already exerted pressure on the currency. He added that Bank Indonesia has intensified its foreign exchange interventions to contain volatility in both the spot and forward markets. Warjiyo maintained the 2026 growth forecast at 4.9%–5.7% and expects first-quarter GDP growth to pick up from the previous quarter. On the global front, the US dollar index held steady near 99.9 ahead of the Federal Reserve’s upcoming interest rate decision.
