BI Rate Hike: Can It Curb Rupiah Volatility?

Jakarta, CNBC Indonesia - Bank Indonesia’s decision to raise its benchmark interest rate by 25 basis points to 5.50% on Tuesday is considered a wise move by Insight Investments Director Camar Remoa amid the depreciation of the Rupiah. The Rupiah, which had plunged to Rp 18,200 per US Dollar, requires efforts to attract foreign capital inflows, and this policy was positively received by the market, managing to lift the Garuda currency to around the Rp 18,000 level per US Dollar. On the other hand, market players are still scrutinising the direction of the government’s fiscal policy regarding fiscal discipline and management of the State Budget.