Indonesia’s central bank has assured markets that the recent slide in the rupiah against the U.S. dollar remains under control, despite the currency hitting a six-month low on Thursday. The drop followed a surprise 25-basis-point interest rate cut by Bank Indonesia (BI) a day earlier, which brought the benchmark rate to 5.75%.
“The market reaction this morning is still under control and short-term in nature as participants digest BI’s decision yesterday,” said Edi Susianto, head of monetary management at Bank Indonesia, in a statement to Reuters.
BI emphasized its commitment to maintaining balance in the foreign exchange market, ensuring adequate supply and demand to prevent further instability.
The rupiah fell as much as 0.4% to 16,383 per dollar during Thursday morning trading. The decline occurred even as other Asian currencies, including the yen, Malaysian ringgit, and Indian rupee, gained ground against the dollar.
Wednesday’s rate cut surprised investors, with the central bank citing the move as a measure to bolster economic growth. However, the rupiah’s weakening highlights market concerns over the potential impact of easing monetary policy on currency stability.
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