Indonesia BI Steps Up FX Defence But USDIDR Upside Risks Persist

Bank Indonesia hiked interest rates by 25bps in an effort to stabilize the rupiah amid significant external pressures. Despite these measures, USDIDR is expected to face continued upside risk due to geopolitical instability and tight USD liquidity.

Key Takeaways

• 1.Bank Indonesia hiked rates by 25bps and introduced FX stabilization measures to support the rupiah amid tight dollar liquidity.
• 2.Upside risks to USDIDR persist due to geopolitical tensions in the Middle East, high US yields, and weakening external buffers.
• 3.Policy bias remains hawkish with another 25bps hike likely by Q3 to anchor inflation and stabilize the currency.

Table of Contents

• Indonesia: BI steps up FX defence, but USDIDR upside risks persist
• Key Points
• Policy Outlook: Bias Toward Further Tightening
• Near-term reprieve for rupiah, but risks skewed to downside
• Disclaimer

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