MNI BRIEF: Rupiah Falls Below Key Level As Bank Indonesia Holds

Indonesia’s central bank has resisted inflationary pressure and a weakening currency and left official interest rates on hold today.

Bank Indonesia’s key reverse repo rate is unchanged at 3.5% after the two-day Board of Governors meeting, at the same level set in September 2020 at the height of the pandemic,. The meeting was expected to be a “live” meeting, with the board under pressure to raise rates with inflation at a five year high of 4.35% in June, up from the bank’s 2% to 4% target, (See: MNI STATE OF PLAY: Pressure On Indonesian CB To Hike Rates).

The weakening rupiah is also believed to be a concern, and the currency broke through the 15,000 level against the USD after the decision. The rupiah began the year at under 14,300 to the USD.