Bank Indonesia Lifts Rates 75 Basis Points as Rupiah Stays 7% Weaker Since February
Updated
Updated · FRANCE 24 English · Jun 14
Bank Indonesia Lifts Rates 75 Basis Points as Rupiah Stays 7% Weaker Since February
3 articles · Updated · FRANCE 24 English · Jun 14
Summary
Back-to-back 75-basis-point hikes gave Indonesia’s battered markets a brief lift this week, helping the rupiah rebound after sliding past 18,100 per dollar and supporting stocks.
Investor unease persists because high oil prices are colliding with Prabowo’s costly fuel subsidies, school meal spending, tighter export controls and moves seen as threatening central bank independence.
BMI said the rupiah remains about 7% weaker than at the start of the February war and warned further depreciation could force Bank Indonesia to raise rates again.
Higher borrowing costs risk slowing growth and straining public finances as the government pursues 8% growth by 2029, while the World Bank sees only up to 5.0% growth under heavy spending pressures.
MSCI is still reviewing Indonesia’s market-risk status over stock-ownership transparency, and any downgrade could accelerate capital flight unless Jakarta rebuilds investor trust with more market-friendly policies.