Rupiah Hovers Near IDR 18,000 as BI Adjusts Policy Tools
The Indonesian rupiah traded near IDR 18,000 per U.S. dollar on Wednesday, recovering from an intraday low of IDR 18,060 after Bank Indonesia kept its key interest rate unchanged at 5.75% for a fourth straight month. To support the currency amid a market selloff sparked by MSCI’s warning over Indonesia’s market status, BI raised its deposit facility rate by 25bps to 5% and enhanced incentives for DNDF hedging to help attract foreign capital. Governor Destry Damayanti noted that cumulative rate hikes of 100bps earlier this year had helped anchor inflation expectations. At the same time, BI sought to bolster domestic liquidity by cutting the reserve requirement ratio by 1 ppt to 8% from Nov. 1 and further to 7% from Dec. 1, a measure expected to inject around IDR 190 trillion into the financial system. Globally, the dollar index steadied after touching a three-week low, supported by rising oil prices that rekindled inflation concerns and reinforced safe-haven demand for the greenback.
The Indonesian rupiah traded near IDR 18,000 per U.S. dollar on Wednesday, recovering from an intraday low of IDR 18,060 after Bank Indonesia kept its key interest rate unchanged at 5.75% for a fourth straight month. To support the currency amid a market selloff sparked by MSCI’s warning over Indonesia’s market status, BI raised its deposit facility rate by 25bps to 5% and enhanced incentives for DNDF hedging to help attract foreign capital. Governor Destry Damayanti noted that cumulative rate hikes of 100bps earlier this year had helped anchor inflation expectations.
At the same time, BI sought to bolster domestic liquidity by cutting the reserve requirement ratio by 1 ppt to 8% from Nov. 1 and further to 7% from Dec. 1, a measure expected to inject around IDR 190 trillion into the financial system. Globally, the dollar index steadied after touching a three-week low, supported by rising oil prices that rekindled inflation concerns and reinforced safe-haven demand for the greenback.