BI Rate Hike Drives Rupiah Strengthening
The rupiah exchange rate closed stronger on Tuesday (9/6/2026) after Bank Indonesia (BI) decided to raise the benchmark interest rate by 25 basis points. The policy is deemed to have provided positive sentiment for the market while reinforcing stabilisation efforts for the exchange rate amidst high global uncertainty.
Based on market data, the rupiah strengthened by 130 points, or 0.71 percent, to Rp18,058 per US dollar at the close of trading, from the previous position of Rp18,188 per US dollar.
Money market observer Ibrahim Assuaibi stated that the rupiah’s strengthening occurred in line with BI’s decision to increase the BI-Rate to 5.50 percent.
‘This increase is a follow-up measure to strengthen the stabilisation of the rupiah exchange rate from the impact of high global volatility due to the war in the Middle East, as well as a pre-emptive step to maintain inflation in 2026 and 2027 so that it remains within the government’s target range of 2.5±1 percent,’ Ibrahim said on Tuesday.
According to him, BI’s move also aims to increase the attractiveness of domestic financial instruments to encourage the return of foreign capital inflows into Indonesia.
BI Governor Perry Warjiyo said the benchmark interest rate hike is part of the strategy to maintain rupiah stability while increasing the return on investment in the domestic financial market.
In BI’s evaluation since the Board of Governors Meeting (RDG) on 19-20 May 2026, Perry assessed that the rupiah’s movement tended to be weaker than previously forecasted.
Aside from being influenced by the ongoing global turmoil, the rupiah’s weakening was also triggered by high demand for foreign currency domestically and the outflow of some foreign portfolio investment funds from the domestic market.
Therefore, BI deemed it necessary to take further steps to strengthen exchange rate stability through the rate hike and several other monetary instruments to attract back foreign capital flows.
Externally, the market is still observing developments in the Middle East conflict. Tensions between Iran and Israel were reported to be easing after both parties halted direct attacks in recent days.
Israeli media reported that Tel Aviv and Washington had conveyed a message to Tehran that there would be no further attacks from Israel as long as Iran does not resume military action. This situation helped ease market concerns over geopolitical risks that previously bolstered the US dollar.
Meanwhile, Bank Indonesia’s Jakarta Interbank Spot Dollar Rate (JISDOR) also strengthened to Rp18,141 per US dollar on Tuesday, compared to the previous position of Rp18,171 per US dollar.