Rupiah Awaits BI Rate Decision Amid Global Tensions

The Indonesian rupiah weakened by 42 points, or 0.13 percent, to Rp17,930 per US dollar in Wednesday morning trading, compared to the previous close of Rp17,888 per US dollar. Permata Bank Chief Economist Josua Pardede stated that market sentiment towards the rupiah was influenced by a wait-and-see attitude ahead of the Bank Indonesia (BI) Board of Governors meeting. “We estimate the rupiah will move in the range of Rp17,850–17,975 per US dollar as market participants await the monetary policy decision,” he said in Jakarta on Wednesday. A 50-basis-point increase in the BI-Rate in May 2026 was the first adjustment since the benchmark rate was held at 4.75 percent from September 2025. However, the rupiah continued to weaken, briefly breaching the Rp18,000 per US dollar level in early June. Following a weekly Board of Governors meeting on 9 June 2026, BI raised the rate by another 25 bps, which helped the rupiah gradually move back below the Rp18,000 threshold. The central bank continued its monetary tightening at the monthly meeting on 18 June 2026, raising the BI-Rate by a further 25 bps to 5.75 percent. BI is scheduled to hold its next monthly Board of Governors meeting on 21-22 July 2026. “We expect BI to hold the BI-Rate at 5.75 percent,” Josua said. Other sentiment stemmed from geopolitical tensions that had shown signs of easing after several mediator countries proposed a temporary ceasefire, with the US indicating willingness to consider the proposal, raising hopes for de-escalation. However, the improvement in sentiment was short-lived as tensions rose again following threats by Yemen’s Houthi group to impose a maritime blockade on Saudi Arabia. “This development increases concerns over potential disruptions to global oil supply, pushing Brent crude oil prices up by 2.01 percent to US$91.01 per barrel,” Josua said.