FX.co ★ Rupiah Finds Support After Surprise BI Rate Hike

The rupiah strengthened to around IDR 18,100 per U.S. dollar on Tuesday afternoon, rebounding from an intraday low of 18,234. The recovery came after Bank Indonesia unexpectedly raised its benchmark rate by 25 basis points to 5.5% in an unscheduled move, following a 50 basis point increase at its regular policy meeting in May. The back-to-back hikes underscore the central bank’s determination to stabilize the currency and keep inflation within its target range amid volatility linked to tensions in the Middle East. Officials reiterated that shoring up the rupiah remains a key priority, as it continues to rank among Asia’s weakest-performing currencies this year. The rupiah had been pressured by heavy selling of Indonesian assets, which undermined investor confidence amid domestic policy concerns and persistent external risks. Sentiment was further supported as the U.S. dollar index retreated from a nine-week high after Iran and Israel agreed to halt attacks, easing geopolitical tensions and improving risk appetite across global markets.