Indonesia Holds Interest Rate Amid Dollar Strength

Bank Indonesia kept its benchmark rate steady at 5.75% on Wednesday, matching market estimates, in the first policy meeting under Governor Destry Damayanti.

This move follows a total 100-basis-point increase across three meetings in May and June, when policymakers tightened policy to support the Indonesian Rupiah after it fell to record lows against the US Dollar (USD).

The USD/IDR pair may see further upside as the US Dollar gains strength from ongoing hawkish sentiment surrounding the Federal Reserve's (Fed) policy outlook.

Market expectations for a 25-basis-point Fed rate hike in October surged to nearly 69.7%, up sharply from 48.7% last week, with strategists at Scotiabank reporting that 'momentum remains with the USD,' and highlighting broad gains against major currencies this morning.