Markets expect Bank Indonesia to pause rate hikes after 100bps of tightening since May amid Rupiah volatility near 17,900.
USD/IDR traded around 17,900 in Asian hours Tuesday, reflecting persistent Rupiah weakness ahead of Bank Indonesia’s two-day policy meeting. The central bank is widely anticipated to hold its benchmark rate at 5.75%, following 100bps of hikes between May and June to support the currency.
Analysts note Bank Indonesia can afford a pause after recent tightening, with strategists citing scope to maintain the current stance. The Rupiah’s decline has been driven by cautious sentiment as investors await the policy decision, though no further hikes are expected.
Indonesia’s fiscal plan for 2027 targets 6.0% growth while narrowing the deficit to 2.40% of GDP, balancing public investment with fiscal prudence. The budget aims to sustain economic momentum amid global uncertainties.