Indonesian Rupiah: BI prioritizes IDR stability – Commerzbank

Indonesian Rupiah (IDR) remains a top priority for Bank Indonesia (BI) as the central bank maintains its 5.75% benchmark interest rate for the third consecutive meeting, according to a report by Commerzbank. BI Governor Destry Damayanti explained that non-rate tools and incentive-based measures will be prioritized to support the rupiah, rather than increasing the yield of the SRBI (Special Reserve Requirement for Banks in Indonesia).

The bank is confident in its 2026 GDP and inflation forecasts, and expects the BI Rate to stay unchanged unless there's a significant weakening of the rupiah or inflation pressures.

Damayanti highlighted the need to balance rising inflation risks and rupiah stability while supporting growth. The central bank has adopted a more neutral tone, expressing its confidence in economic fundamentals to keep the rupiah supported. Additionally, BI expanded FX hedging incentives, offering higher premiums for longer tenors of conventional hedging swaps to attract portfolio inflows.

BI remains on hold in its monetary policy as long as IDR depreciation pressures remain contained. The bank will continue to monitor the situation closely and adjust its policy if needed. Overall, IDR stability will be BI's primary focus for the remainder of the year.