Indonesia’s central bank delivered a surprise rate hike on Wednesday, stepping up efforts to support the rupiah currency which has fallen to four-year lows on rising risk aversion and a delay in the expected timing of any U.S. policy easing.
Bank Indonesia (BI) raised the 7-day reverse repurchase rate by 25 basis points to 6.25%, its highest since the bank made the instrument its main policy rate in 2016.
Six of 35 economists polled by Reuters had predicted the hike, which was BI’s first since October. The rest had expected BI to stand pat, Reuters reported today.
BI also increased the overnight deposit facility and lending facility rates by the same amount to 5.50% and 7.00%, respectively.
