Bank Indonesia Vows to Defend Rupiah as FX Swings Test Policymakers

By Ying Xian Wong

Indonesia's central bank has reiterated its defense of the rupiah, coming as volatility in Asian currencies tests the region's policymakers.

Bank Indonesia said it will keep intervening to stabilize the rupiah, which is off to a poor start in 2026, hovering near the record lows against the dollar reached last in April.

The currency fell to 16,872 against the greenback early on Wednesday, near its record low of 16,970 in April, LSEG data showed.

FX swings are in focus for policymakers in Asia at the start of the year, fueling market expectations of more potential intervention.

The won is hovering at its lowest levels in more than a decade versus the dollar, while the baht's unusual strength has spurred the Bank of Thailand to double down on vows of tighter scrutiny over foreign-exchange moves. In India, the rupee has hit a series of record lows versus the greenback over the past months, which analysts say is prompting a firmer stance by the RBI.

Erwin G. Hutapea, an official at Indonesia's central bank, said Wednesday that the rupiah's weakness is in line with regional currency movements. He cited risk-off global sentiment amid rising geopolitical tensions as among the factors driving depreciation, along with concerns over central bank independence in some developed countries and uncertainty over the Federal Reserve's rate path.

"Bank Indonesia will remain active in the market to ensure the rupiah exchange rate reflects the country's fundamentals and a healthy market mechanism", said Hutapea, head of monetary and securities management at BI.

Given the market turbulence spurred by concerns about Fed independence and geopolitical conflicts, FX stability could be at the center of upcoming central bank meetings, analysts say.

Renewed rupiah pressure is one reason why economists at Barclays have pushed back their call for Bank Indonesia rate cuts. They now see two 25-basis-points cuts in June and December, instead of in the first and second quarters respectively.

Timing remains highly uncertain and will hinge on the rupiah, which likely needs to strengthen for an extended period before BI can ease again, Barclays said in a note.

In Korea, although macroeconomic conditions support further easing by the country's central bank, concerns about financial stability limit the possibility of additional easing, Goldman Sachs economists say. Despite progress in steadying housing and money markets, won stability is likely to remain a central consideration for Bank of Korea policymakers, they wrote in a recent note.

The Thai central bank meanwhile has said it is seeking a wider remit as it signals a more proactive approach to tackling baht volatility, CIMB Securities analysts said. The bank's governor has said he wants to see a weaker currency that align with economic fundamentals.

Write to Ying Xian Wong at yingxian.wong@wsj.com

(END) Dow Jones Newswires

January 14, 2026 02:03 ET (07:03 GMT)