Indonesian Rupiah weakens as BI holds rate at 5.75%

• USD/IDR gains as the Indonesian Rupiah weakens after BI kept its benchmark rate steady at 5.75%.
• BI’s KLM program injected 431.9 trillion Rupiah, boosting June loan growth to 12.67% year-over-year.
• Markets are currently pricing in over 69% odds of a 25 basis-point Fed rate hike this September, per CME FedWatch.

USD/IDR has recovered its daily losses, trading around 17,950 during the European hours on Wednesday. The pair appreciates as the Indonesian Rupiah (IDR) struggles after the Bank Indonesia (BI) decided to hold its benchmark rate steady at 5.75% in July. The hold came as a surprise to many market participants, who had widely anticipated a 25-basis-point rate hike to help stabilize the Rupiah.

Bank Indonesia’s KLM program has injected 431.9 trillion Rupiah in additional liquidity into the financial system as of early July, helping propel June loan growth to +12.67% year-over-year. Full-year 2026 lending growth remains firmly on track to meet the projected 8%–12% target range, underpinned by a banking sector that continues to demonstrate strong resilience against global economic headwinds.

The upside of the USD/IDR pair could be restrained as the US Dollar (USD) struggles despite growing risk aversion tied to escalating geopolitical tensions between the United States and Iran.

However, the Greenback may regain its ground as CME FedWatch Tool indicates that markets are currently pricing in over 69% odds of at least a 25 basis-point rate hike at the upcoming September meeting. However, the Fed is widely expected to leave the federal funds rate unchanged. Despite this anticipated pause, expectations for tighter policy remain elevated beyond July.