Key facts
- Bank Indonesia is tightening oversight of foreign exchange dealings to curb speculation and support the rupiah.
- The threshold for FX purchases requiring supporting documents will be lowered to $25,000 per transaction starting June 2026.
- The central bank unexpectedly raised its benchmark interest rate by 25 basis points to 6.00% to stabilize the rupiah.
- Bank Indonesia has sufficient foreign exchange reserves for market interventions.
- The central bank will also issue FX-denominated securities to deepen the domestic foreign exchange market.
Indonesia's central bank is implementing stricter measures to stabilize the rupiah and bolster the nation's economy. Bank Indonesia is intensifying its monitoring of foreign exchange dealings by both Wall Street lenders and local financial institutions, aiming to prevent speculative transactions and ensure that currency purchases are for legitimate commercial purposes.
As part of these efforts, the threshold for foreign exchange purchases that can be made without supporting documentation will be reduced from $50,000 to $25,000 per transaction, effective June 2026. This move follows a prior reduction of the threshold from $100,000 to $50,000. Data indicates that this previous adjustment led to a decrease in average daily foreign exchange transactions conducted without underlying documents, from approximately $78 million to $62 million.
In a separate but related move to support the rupiah, Bank Indonesia unexpectedly raised its benchmark 7-day reverse repurchase rate by 25 basis points to 6.00%. This marks the second rate hike this year and the seventh since the central bank began its tightening cycle in 2022. Governor Perry Warjiyo stated that the increase is intended to strengthen stabilization measures for the rupiah amidst increasing global uncertainty and to preemptively mitigate the impact on inflation through imported goods.
Bank Indonesia also announced plans to issue FX-denominated securities to deepen the domestic foreign exchange market and ease liquidity measures for banks. The central bank affirmed that it possesses sufficient foreign exchange reserves to conduct significant market interventions aimed at stabilizing the rupiah.