One Day After BI's Reference Interest Rate Hike, Rupiah Weakens to 16,208

The Indonesian Rupiah exchange rate against the US dollar stood at 16,208, according to Bank Indonesia (BI)'s JISDOR data as of Thursday, April 25, 2024.

This figure weakened from the previous exchange rate of Rp16,161 per US dollar on Wednesday, April 24, 2024. The rate had briefly strengthened that day after BI raised its benchmark interest rate to 6.25% for April 2024. Compared to the reference rate on Tuesday, April 23, 2024, the Rupiah exchange rate had reached Rp16,244 per US dollar.

Citing *Katadata*, Lukman Leong, a money market analyst, assessed that the Rupiah weakened amid the US dollar's resurgence following durable goods sales data that exceeded expectations.

"Investors are also anticipating the US Gross Domestic Product (GDP) economic data to be released tonight," Lukman told Katadata on Thursday, April 25, 2024.

However, he believes that BI's decision to raise the interest rate by 25 basis points to 6.25% can help curb a larger depreciation of the Rupiah.

"Going forward, it will help to contain a larger depreciation, but it cannot significantly strengthen it," he said. Lukman predicts the Rupiah will move in the range of 16,100-16,250.

Bank Indonesia's Benchmark Interest Rate Hike

Bank Indonesia (BI) raised its benchmark BI 7-Day Reverse Repo Rate (BI7DRR) by 25 basis points (bps) to 6.25% in April 2024.

Following this policy, the Deposit Facility interest rate also increased by 25 bps to 5.50%, and the Lending Facility interest rate by 25 bps to 7.00%.

The interest rate hike was decided during the BI Board of Governors Meeting (RDG) on April 23-24, 2024. This is the first increase since the beginning of 2024, following the last increase in October 2023.

Perry Warjiyo, Governor of BI, stated that this interest rate hike aims to strengthen the Rupiah exchange rate, which has been continuously weakening due to the impact of worsening global risks.

Furthermore, the interest rate hike is emphasized as a pre-emptive and forward-looking measure to ensure inflation remains within the target of 2.5±1% in 2024 and 2025, in line with the monetary policy principle that prioritizes stability.