Rupiah Holds Near IDR 17,820 Following BI Rate Move

The Indonesian rupiah traded near IDR 17,820 per U.S. dollar on Wednesday afternoon, extending recent gains after Bank Indonesia kept its benchmark rate unchanged at 5.75%, as widely expected. The decision marked the first policy meeting under newly appointed Governor Destry Damayanti and followed a cumulative 100bp increase in three moves during May and June, when the central bank tightened policy to support the currency after it fell to record lows against the dollar. The rupiah has since recovered some ground but faced renewed pressure in recent weeks as concerns over Indonesia’s fiscal outlook intensified amid higher oil prices. A still-wide interest-rate differential provided some support, but gains were limited by a firmer U.S. dollar. The dollar index hovered near an eight-week high as hawkish Federal Reserve signals reinforced expectations for another rate hike later this year.