Bank Indonesia is expected to raise its key rate to 6.0% to counter inflation and support the rupiah amid fiscal resilience efforts.
The USD/IDR pair climbed to around 17,960 in Asian trading, extending a six-day rally ahead of Bank Indonesia’s policy decision. The central bank is widely anticipated to increase its benchmark rate by 25 basis points to 6.0%, following 100 basis points of tightening in May and June to stabilize the rupiah.
June’s inflation hit the upper end of Bank Indonesia’s 1.5%-3.5% target range, prompting intensified inflation-control measures. Finance Minister Purbaya Yudhi highlighted fiscal resilience, citing a stable sovereign outlook and manageable deficit, as authorities seek to bolster economic defenses.
Risk aversion also supported the USD, with geopolitical tensions between the U.S. and Iran adding upward pressure. The USD/CHF pair may extend gains as investors monitor developments, though no immediate escalation has been confirmed.