BI Rate Has Increased 100 Bps, Destry Reveals Maintaining the Stability of the Rupiah and Pulling Dollars into Indonesia

Bank Indonesia (BI) has raised the benchmark interest rate or BI Rate by 100 basis points (bps) throughout 2026 as an effort to maintain the stability of the rupiah exchange rate amid high global economic uncertainty and ongoing external pressures.

For information in the Board of Governors Meeting (RDG) held on June 17-18, 2026, BI again raised the BI Rate by 25 bps to 5.75 percent.

With this decision, the total increase in the benchmark interest rate this year has reached 100 bps, after BI had previously raised the interest rate by 25 bps on June 9, 2026 and by 50 bps on May 19-20, 2026.

BI Senior Deputy Governor Destry Damayanti said that the current monetary policy is focused on maintaining the stability of the rupiah while increasing foreign capital flows into the domestic financial market.

"If we look at this year, we have raised 100 basis points. Today is the last 25 (bps), previously 50 (bps) and previously again 25 basis points," he said in a press conference, Thursday, June 18.

According to him, one of the main objectives of the interest rate hike is to attract foreign capital inflows into the country because the move is considered important to meet foreign exchange liquidity needs, especially the US dollar.

"But the impact is that we, our main goal is to bring in inflows, namely to bring in foreign exchange, because this is in line with the needs of all of us here, namely for dollars," he added.

Destry added that the strategy has begun to show positive results, namely, as of June 17, 2026, the State Securities (SBN) market recorded an inflow of foreign capital of IDR 4.9 trillion, and the Indonesian Bank Rupiah Securities (SRBI) instrument managed to record an inflow of IDR 55.3 trillion.

He explained that the rapid flow of foreign capital also increased the supply of foreign exchange in the domestic market, thus providing support for the strengthening of the rupiah exchange rate.

"This means that with the inflow of foreign capital that has entered quite a lot, of course, this will supply additional foreign exchange in our market and that at least answers why the rupiah has strengthened in recent days, also today and of course in the future we will continue to maintain it, with as the Governor said, various steps we take in order to continue to encourage the inflow that has entered," he said.

On the same occasion, Governor of BI Perry Warjiyo emphasized that the increase in the BI Rate was part of a stronger policy response to maintain the stability of the rupiah while anticipating inflationary pressures in the future.

"This increase is a follow-up step to further strengthen the stability of the rupiah exchange rate in the midst of high global uncertainty, as well as a pre-emptive step to keep inflation in 2026 and 2027 within the target range of 2.5 percent plus minus 1 percent set by the government," he said.

In addition to considering domestic conditions, BI also examines global monetary policy developments, especially in the United States, namely even though the Federal Reserve (The Fed) maintains the Fed Funds Rate at 3.75 percent, the opportunity for interest rate hikes is still open as inflation pressures increase in the Uncle Sam's country.

Perry added that the high yield of US government bonds is still the main attraction for global investors, namely as of June 17, 2026, the yield of US Treasury 10-year tenor was recorded at 4.49 percent, while the two-year tenor was at the level of 4.18 percent.

On the other hand, the US dollar index against developed and emerging countries' currencies is still at a strong level, which is a condition that encourages global investors to place funds in US dollar-based safe haven assets compared to assets in emerging countries.

In order to maintain the competitiveness of domestic financial instruments, BI not only relies on the increase in the benchmark interest rate, namely the central bank also maintains the SRBI yield rate of 6, 9, and 12 months to remain competitive and continues to provide a 10 percent hedging swap incentive for foreign investors.

"So that foreign capital flows continue to continue in order to strengthen the stability of the rupiah exchange rate," he explained.

Perry is optimistic that the combination of BI monetary policy and synergy with the government, and the continued flow of foreign capital will be able to maintain the stability of the rupiah in the future.

"We are confident that foreign capital flows will continue to flow in, the rupiah will become more stable and strengthen in the future," he said.