Rupiah Shaken, BI Maintains Interest Rate at 4.75% Until Early 2026

The Bank Indonesia (BI) Board of Governors Meeting, held on January 20-21, 2026, decided to maintain the benchmark interest rate at 4.75%.

In line with this, the deposit facility rate remained at 3.75% and the lending facility rate at 5.50%.

This interest rate hold occurred amidst a rupiah exchange rate under pressure.

During a BI press conference reported by Katadata, BI Governor Perry Warjiyo stated that the rupiah exchange rate on Tuesday (January 20, 2026) stood at 16,945 per US dollar, weakening by 1.53% year-to-date.

He explained that the rupiah's weakening was influenced by foreign capital outflows due to increasing uncertainty in global financial markets and a rise in foreign exchange demand in line with economic activity.

"To maintain this stability, BI will increase the intensity of rupiah stabilization measures through intervention in both offshore and onshore markets," Perry said.

Regarding the rupiah exchange rate, currency and digital asset market observer Ibrahim Assuaibi revealed several factors behind its weakening.

These factors include a 10% tariff threat from US President Donald Trump against eight European countries that oppose Washington's plan to acquire Greenland.

Other external factors, such as developments regarding the summoning of Fed Chair Jerome Powell by the Attorney General's Office, speculation about the Fed's interest rates, and recent US employment data, also put pressure on the rupiah.

"The rupiah's weakening is indeed due to many complicated issues, both external and internal," Ibrahim said on Tuesday (January 20).

Meanwhile, from the internal side, according to him, market participants are concerned about the fiscal deficit approaching 3% of GDP at the end of last year. Investors are worried that pressure on tax revenue will continue and potentially widen the fiscal deficit.

"As for the nomination of Thomas Djiwandono as a candidate for BI deputy, it has an influence on the rupiah's weakening, but not a significant one," he said.

(Read Katadata: BI Maintains Benchmark Interest Rate at 4.75% Amidst Rupiah's Slump)