TEMPO.CO, Jakarta – Bank Indonesia (BI) has pledged to step up efforts to stabilize the rupiah, as Indonesia's currency comes under renewed pressure from a strengthening U.S. dollar driven by expectations of tighter U.S. monetary policy.
"We will continue to be fully present in the market to ensure the rupiah remains stable, and over time we will strengthen the currency," Ramdan Denny Prakoso, Executive Director of BI's Communications Department, said at the House of Representatives (DPR) complex in Senayan, Jakarta, on Tuesday, July 7.
Rupiah Weakens as Dollar Strengthens
The rupiah briefly recovered to around Rp17,000 per U.S. dollar after Bank Indonesia raised its benchmark interest rate, or BI Rate, having previously weakened beyond Rp18,000 per dollar.
However, the currency has since come under pressure again. According to Trading Economics, the rupiah weakened to Rp18,003 per U.S. dollar on Wednesday afternoon, July 8.
Hawkish Fed Signals Weigh on Emerging Market Currencies
Denny said one of the main factors behind the rupiah's depreciation is the increasingly hawkish stance adopted by officials at the U.S. Federal Reserve during the Federal Open Market Committee (FOMC) meeting on June 17.
Although the Fed kept its benchmark interest rate, the federal funds rate, unchanged, markets interpreted policymakers' comments as signaling tighter monetary policy ahead.
The shift in expectations boosted the U.S. Dollar Index (DXY) and put pressure on emerging-market currencies, including the rupiah.
"The hawkish signal indicates that the federal funds rate is now expected not to decline this year, but instead could increase," Denny said.
He noted that the DXY rose from around 95 in January 2026 to 101 by the end of June, reflecting broad-based dollar strength.
Rupiah Not Alone in Facing Pressure
Denny emphasized that the rupiah's decline is part of a wider trend affecting emerging-market currencies.
Based on Bank Indonesia's monitoring, the Russian ruble recorded the sharpest depreciation, weakening 5.5 percent against the U.S. dollar.
The Thai baht fell 2.3 percent, followed by the rupiah at 1.4 percent. The South Korean won and the Philippine peso each weakened by 1 percent, while the Indian rupee declined 0.7 percent and the Chinese renminbi fell 0.5 percent.
BI Steps Up Market Intervention
Bank Indonesia has rolled out several measures to support the rupiah, including a cumulative 100-basis-point increase in the BI Rate between May and June, bringing the benchmark rate to 5.75 percent.
The central bank has also intensified its market intervention operations in both domestic and offshore markets, while offering attractive yields on Bank Indonesia Rupiah Securities (SRBI) to encourage foreign capital inflows.
According to Denny, Bank Indonesia remains committed to maintaining rupiah stability, while stressing that coordinated efforts across institutions will be essential.
"Certainly, synergy from various parties is very necessary to collectively strengthen our rupiah against the US dollar," he said.
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