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Central Bank · Indonesia · Rate Hike · Rupiah
Bank Indonesia unexpectedly raised its benchmark interest rate by 25 basis points to 5.5 percent on Tuesday, June 9, 2026, marking its second surprise hike in a month, aiming to stabilize the weakening rupiah and combat inflation amidst high global volatility.
The central bank cited the Middle East war's impact on energy costs as a key driver for the rupiah's decline to a record low of over 18,000 to the dollar. This preemptive measure seeks to maintain inflation within the government's 2.5 +/- 1.0 percent target for 2026 and 2027 and attract foreign portfolio investment.
Despite recent tightening of dollar purchase rules, the rupiah has tumbled over seven percent this year, making it Asia's worst-performing currency, according to Bloomberg News. The Jakarta stock index rose nearly five percent following the announcement.
Further investor concerns include a narrowed trade surplus to $89 million in April from $3.3 billion a month prior, and President Prabowo Subianto's commodity export controls, which raise fears of "resource nationalism."
