Bank Indonesia raises benchmark rate by 25 bps to 5.75% to support the rupiah

Bank Indonesia lifted its benchmark policy rate by 25 basis points, setting the BI Rate at 5.75%. Governor Perry Warjiyo said the move was taken to bolster the rupiah amid heightened global uncertainty and to keep inflation within the government’s target range.

The hike, the sixth in eight months, follows a slide in the currency to about Rp 17,801 per U.S. dollar and concerns about a possible MSCI downgrade of Indonesia’s sovereign debt. The higher rate has pushed corporate refinancing costs up roughly 12% since May, prompting multinationals to increase hedging activity and local firms to confront tighter liquidity.