Bank Indonesia (BI) unexpectedly raised its policy rate by 25 bps today. In the view of economists at ING, the Indonesian rupiah (IDR) could strengthen in the near-term after the surprising rate hike.

BI likely not done for the year

“BI finally hiked after staying on hold for the whole of 2022, confident that policy tightening would not derail the economy's recovery. We expect at least two more rate hikes by the central bank this year.”   

“The IDR could gain support from the surprise rate hike in the near-term and could strengthen further should Indonesia's trade surplus remain sizable.”