Bank Indonesia Claims Rupiah Strengthens After Reference Interest Rate Rises

Illustration (Photo: Doc. Antara)

JAKARTA - Bank Indonesia (BI) stated that the decision to increase the benchmark interest rate by 25 basis points (bps) earlier this week brought a number of positive impacts.

BI Senior Deputy Governor Destry Damayanti said the indication was reflected in the strengthening trend of the rupiah exchange rate.

"After Bank Indonesia raised interest rates, we saw that our rupiah exchange rate strengthened," he said when attending a working meeting with the DPD RI at the Senayan Parliament Complex, Jakarta, Thursday, August 25.

According to Destry, this record is one of the positive indicators of the Indonesian economy. Meanwhile, various other things are the return of foreign capital inflows to the domestic financial market (capital inflow), especially for bond instruments.

"Then what follows is the maintained supply of foreign currency in the domestic market, as well as a positive perspective on the national economy by incoming foreign investors," he said.

Destry added, this situation brings fresh air to Indonesia in the midst of unresolved pressure.

"This is certainly an achievement because the uncertainty in global financial markets is still very high," he said.

As is known, Bank Indonesia adopted a policy of increasing the interest rate by 25 bps to 3.75 percent from the previous 3.50 percent.

The monetary authority's move to hoist the BI rate is the first in the pandemic era after the historical lowest interest rate of 3.50 percent has remained since 2020.