Indonesia: Policy continuity supports Rupiah – ING

ING’s Lynn Song expects Bank Indonesia to keep its benchmark rate unchanged at 5.75% this week, prioritizing Rupiah stability while avoiding an immediate hike. The report highlights BI’s growing reliance on non-rate tools such as SRBI yields and FX intervention. Leadership transition at BI is seen reducing the likelihood of an August move, with continuity the key message.

BI seen holding benchmark rate steady

"We expect Bank Indonesia to hold the benchmark rate at 5.75% on Wednesday."

"BI’s unexpected July hold showed that policymakers are increasingly balancing rupiah stability against the need to support growth."

"While exchange-rate stability remains the main priority, BI appears more willing to use non-rate tools, including Bank Indonesia Rupiah Securities (SRBI) yields and FX intervention, rather than raising borrowing costs immediately."

"The ongoing BI leadership transition also lowers the probability of an August move, as Acting Governor Destry Damayanti is likely to use her first meeting to signal continuity rather than deliver a surprise hike."