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>>Targeting 18,000: How the Indonesian Rupiah Is Set to Reach New Historic Lows Even After a Major Rate Increase

Targeting 18,000: How the Indonesian Rupiah Is Set to Reach New Historic Lows Even After a Major Rate Increase

crypthub

about 4 hours ago

Rupiah Near 18,000 Despite Rate Hike

Bank Indonesia raised its benchmark to 6.25%, the highest in a decade, to support the rupiah. The currency kept falling, now around 18,000 per dollar, a level last seen in 1998. Higher yields alone could not offset the strong US dollar.

External and Domestic Drivers

The Fed’s prolonged tightening has kept the dollar firm, pressuring emerging markets. Lower commodity prices cut Indonesia’s trade surplus, while import demand stays high. Political uncertainty before the presidential election adds a risk premium, prompting capital outflows.

Implications and Outlook

Rupiah weakness raises import costs, stokes inflation and burdens dollar‑denominated debt. Further rate hikes risk slowing growth, but inaction could trigger a deeper crisis. The currency’s path now hinges on US interest‑rate policy and global commodity prices.