2025.09.1804:37:50UTC+00Rupiah Slips After Surprise BI Rate Cut

On Thursday, the Indonesian rupiah slipped to approximately 16,500 per dollar following an unexpected 25 basis points cut in the key interest rates by the central bank, lowering it to 4.75%. This reduction marks the sixth occurrence since September 2024, cumulatively bringing borrowing costs down by 150 basis points, reaching their lowest since late 2022. Bank Indonesia's Governor, Perry Warjiyo, stated on Wednesday that the board would continue to evaluate possibilities for further rate cuts, striving to balance currency stability with economic growth. The rupiah has depreciated roughly 2% against the US dollar this year. This decline is attributed to domestic financial concerns, ongoing protests since late August, and last week’s abrupt removal of Finance Minister Sri Mulyani Indrawati. Additionally, questions linger regarding the central bank's autonomy in light of a “burden sharing” scheme designed to support government spending. On a global scale, the dollar index remains above 97, maintaining its upward trend following the Federal Reserve's widely anticipated 25 basis points rate cut. The Fed signaled the likelihood of two additional reductions this year, with just one projected for 2026.