BI Rate Rises, Economist Says Rupiah Could Return to Rp17,200 per US dollar

Jakarta — Kompas.com. The increase in Bank Indonesia’s benchmark rate (BI rate) is said to potentially attract foreign capital inflows into the country, so the rupiah could strengthen going forward. Global Markets Economist at Maybank Indonesia, Myrdal Gunarto, estimates that with this hike the rupiah could strengthen to around Rp17,236 per US dollar. ‘We expect the pressures in our financial markets to ease. In conditions like this, the rupiah should be able to return to the Rp17,236 level,’ he told Kompas.com on Wednesday, 20 May 2026. It is hoped this will enhance the attractiveness of domestic financial instruments for investors. Indeed, the move will not only strengthen foreign currency liquidity through Bank Indonesia’s Rupiah Securities (SRBI) instruments but also push up yields on other instruments such as government bonds, savings, and deposits. ‘For the yield of 10-year government bonds it could jump to around 6.9 to 7.2 percent,’ Myrdal said. ‘If that happens, flows will come in. We will see flows coming in; regardless of the condition, the flows will come in from outside. So we expect the pressures in our financial markets to ease. In such conditions the rupiah should be able to return to the Rp17,236 level,’ he said. Meanwhile, David Sumual, Chief Economist at PT Bank Central Asia Tbk (BBCA) said the rate hike could provide a positive sentiment for the rupiah. However, on the other hand, there are side effects that must be anticipated from rising inflation in the future. Earlier, BI raised the BI rate by 50 basis points to 5.25 percent in the May 2026 BI Board of Governors meeting. Consequently, the deposit facility rate rose by 50 basis points to 4.25 percent and the lending facility rate also rose by 50 basis points to 6 percent. The rate hike is implemented by the central bank to stabilise the rupiah’s exchange rate, which has been weakening amid high global volatility due to the war in the Middle East.