Indonesian markets showed signs of stabilising after Tuesday’s off-cycle interest rate hike. The rupiah picked up some momentum although it is still near the 18,000 mark against the USD. Jakarta’s benchmark stock index extended gains, up more than 2%. Bank Indonesia’s 25-basis-point hike took the benchmark rate to 5.5%, ahead of its next policy meeting on 18 June. The rupiah hit record lows as investors fled equity markets since the start of the year, amid concerns about President Prabowo Subianto’s policy agenda and broader geopolitical uncertainty. BI also unveiled other measures to support the rupiah and attract foreign capital, including higher yields on its securities. While the unexpected rate hike is aimed at supporting the rupiah, a prolonged currency depreciation can ripple through financial markets, disrupt businesses and drive costs for consumers. Olivia Marzuki explains.
www.channelnewsasia.com