BI Holds Interest Rate, Rupiah Edges Slightly Stronger to Rp17,875/US$

The rupiah exchange rate reversed course to strengthen against the United States dollar at the close of trading on Wednesday (22/7/2026), following Bank Indonesia’s (BI) decision to hold its benchmark interest rate. According to Refinitiv, the rupiah closed 0.03% stronger at Rp17,875/US.Thisappreciationcontrastedwithitsmovementatthestartoftrading, whentheGarudacurrencyopened0.22. The strengthening means the rupiah has now recorded appreciation for two consecutive trading days. On Tuesday (21/7/2026), the rupiah closed 0.28% stronger at Rp17,880/US$. Meanwhile, the US dollar index (DXY) was observed weakening by 0.08% to 101.092 as of 15.00 WIB. The rupiah’s gain occurred amid Bank Indonesia’s decision to hold its benchmark interest rate. The board of governors’ meeting held on 21-22 July 2026 decided to maintain the BI Rate at 5.75%. The Deposit Facility rate also remained at 4.75%, while the Lending Facility rate was held at 6.50%. With the decision to hold the benchmark rate, Bank Indonesia is promoting other policies, namely providing incentives to encourage foreign capital flows into the Indonesian money market in order to maintain rupiah exchange rate stability. “BI is expanding incentive policies and a number of other policies to increase foreign portfolio inflows and strengthen rupiah exchange rate stability, accelerate money market and foreign exchange market deepening, and increase liquidity,” explained BI Governor Perry Warjiyo during the monthly BI Board of Governors meeting press conference on Wednesday (22/7/2026). Perry also explained that the decision is consistent with the central bank’s efforts to strengthen rupiah exchange rate stability amid high global uncertainty. “As well as maintaining inflation within the target range of 2.5% plus minus 1%,” Perry said. The decision differed from the projections of the majority of market participants. Based on a CNBC Indonesia poll of 14 institutions, eight respondents had previously forecast a 25 basis point BI Rate hike to 6.00%. Meanwhile, six other respondents projected the interest rate would remain at 5.75%. BI held the interest rate after tightening for the previous three months. Since May 2026, the central bank has cumulatively raised the BI Rate by 100 bps to reach 5.75% in June. BI emphasised that monetary policy remains directed at maintaining rupiah and inflation stability, while macroprudential and payment system policies remain supportive of economic growth.