The Indonesian Rupiah (IDR) strengthened for the second consecutive day, with the USD/IDR pair trading around 17,810 during Asian hours on Thursday, following Bank Indonesia's (BI) renewed commitment to currency stability under its new acting Governor, Destry Damayanti [1]. In her first policy meeting, BI held its benchmark interest rate steady at 5.75% for the second straight month, signaling policy continuity after a previous 100-basis-point tightening cycle that began in May [1]. Central bank officials emphasized that their strategy will focus on stabilizing the rupiah to contain imported inflation, while also using targeted liquidity measures to support domestic economic growth [1].
Economists at UOB Group highlighted that Acting Governor Damayanti underscored BI’s priority of “preserving rupiah stability amid heightened global financial market volatility” and reaffirmed the commitment to keeping inflation within BI's target range of 2.5% ±1% for 2026-2027 [1]. This approach is designed to support sustainable economic growth and aligns the current tight monetary stance with broader macro-financial stability objectives [1].
Despite the rupiah’s gains, the downside for USD/IDR could be limited due to a strengthening US Dollar, driven by hawkish sentiment from the latest Federal Reserve (Fed) Meeting Minutes, which indicated officials may hike interest rates again if inflation does not cool further [1]. Additionally, ongoing geopolitical tensions in the Strait of Hormuz between the US and Iran have contributed to elevated risk aversion, favoring the US Dollar, although the conflict appears to have entered a lull with Washington focusing on economic isolation rather than military intervention [1].
Strategists at Brown Brothers Harriman noted that the Dollar is under mild pressure, with the USD down against most major currencies, even as the sell-off in stocks and bonds has eased and crude oil prices remain near a three-week high around $91 a barrel [1].
CONCLUSION
Bank Indonesia’s decision to maintain its policy rate and prioritize rupiah stability under Acting Governor Damayanti has supported the Indonesian currency, despite external pressures from a stronger US Dollar and geopolitical risks. The central bank’s commitment to inflation targeting and macro-financial stability is expected to anchor market confidence in the near term.