Key facts
- Bank Indonesia governor insists on independence over rate decisions.
- Rupiah has become emerging Asia's worst-performing currency.
- Central bank raised rates 100 basis points between May and June.
- President Prabowo Subianto's nephew nominated for a senior BI role.
- 10-year Indonesian government bond yield reached its highest in over three months.
Bank Indonesia Governor Destry Damayanti has asserted the central bank's independence in setting interest rates, even as it increases coordination with President Prabowo Subianto's administration. This comes amid growing investor concerns about political interference potentially influencing monetary policy and impacting the Indonesian rupiah, which has become the worst-performing currency in emerging Asia. The central bank previously raised rates by 100 basis points between May and June to stabilize the currency. Further fueling market nerves, President Subianto has nominated his nephew, Thomas Djiwandono, for a senior role at Bank Indonesia, and parliament has expanded the bank's mandate to include economic growth. Finance Minister Purbaya Yudhi Sadewa has pledged to uphold the central bank's independence and stated he would not pressure it to finance development programs.