Bank Indonesia Vows All-Out Effort to Stabilise Rupiah
Executive Director of Bank Indonesia’s (BI) Communications Department, Ramdan Denny Prakoso, stated that the central bank will continue to make strenuous efforts to maintain the stability of the rupiah exchange rate. The statement was made in response to the Indonesian currency’s movement, which has been battered by a strengthening US dollar.
“Bank Indonesia will go all out to remain in the market to provide assurance that the rupiah will remain stable, and we will gradually make the rupiah strengthen,” Denny said at the DPR complex in Jakarta on 7 July 2026.
When the central bank raised its benchmark interest rate, the BI-rate, the rupiah briefly returned to the level of Rp 17,000 per US dollar from previously breaching the Rp 18,000 per US dollar mark. However, as of this week, the rupiah is again approaching that threshold. Citing Trading Economics data, on Wednesday afternoon, 8 July 2026, the rupiah even briefly slipped back to the level of Rp 18,003 per US dollar.
Denny explained that the main sentiment affecting the rupiah’s depreciation is the hawkish signals from US Federal Reserve officials during their regular Federal Open Market Committee (FOMC) meeting on 17 June 2026. According to him, although The Fed decided to hold the Fed Fund Rate at the FOMC meeting, the market observed a tendency towards tighter monetary policy. This sentiment triggered the US Dollar Index (DXY) to strengthen and put pressure on the currencies of developing countries, including the rupiah.
“So the hawkish signal indicates that the Fed Fund Rate in the future, especially this year, has a probability of not decreasing but rather increasing,” Denny said.
He added that this sentiment provoked a reaction in the US Dollar Index. In January 2026, the DXY was still at the level of 95. But by the end of June, the index had increased to 101.
The rupiah is not the only currency to have fallen against the US dollar. Based on BI’s observations, the Russian ruble has experienced the deepest depreciation compared to other emerging market currencies, falling 5.5 percent. The Thai baht dropped 2.3 percent, while the rupiah weakened by 1.4 percent. The South Korean won and the Philippine peso also fell by 1 percent, while the Indian rupee declined by 0.7 percent and the Chinese renminbi by 0.5 percent.
Bank Indonesia has undertaken a number of efforts to stem the rupiah’s weakening. These include raising the BI-rate cumulatively by 100 basis points during the May to June period, bringing it to the level of 5.75 percent. In addition, BI is actively conducting market operations both domestically and abroad, as well as offering attractive yields on Bank Indonesia Rupiah Securities (SRBI) to attract foreign capital inflows into the domestic market.
According to Denny, BI will not stand idly by. “Synergy from various parties is certainly very necessary to jointly bring the rupiah to strengthen against the US dollar,” he said.