October 23, 2025 | 12:02 pm
TEMPO.CO, Jakarta - The exchange rate of the Indonesia's rupiah at the opening of trading on Thursday in Jakarta weakened by 35 points or 0.21 percent to Rp16,620 per US dollar from the previous Rp16,585 per US dollar.
Head Economist Josua Pardede of Permata Bank said that this depreciation is due to cautious investor sentiment towards global trends ahead of the release of US inflation data scheduled for Friday, October 24, 2025. However, with Bank Indonesia's decision to maintain the benchmark interest rate or BI Rate, the weakening exchange rate of the rupiah tends to be contained.
He mentioned that as long as portfolio flows do not consistently reverse, the room for strengthening will tend to be gradual and subjected to retesting by global sentiment.
"The short-term impact on the rupiah is stabilization with reduced volatility. The maintained BI Rate, active forex intervention, and support from exporters tend to hold back rupiah depreciation and open up opportunities for slight strengthening, as we saw yesterday," Josua said in Jakarta on Thursday, October 23, 2025, as quoted from Antara.
The Board of Governors Meeting of Bank Indonesia in October 2025, which took place on Tuesday, October 21, 2025, and Wednesday, decided to maintain the benchmark interest rate or BI Rate at a level of 4.75 percent.
The deposit facility interest rate was decided to remain at 3.75 percent. Likewise, the lending facility interest rate was decided to remain at 5.5 percent.
Josua stated that the reason BI is holding the interest rate can be seen from both micro and macro perspectives.
On the macro side, inflation for 2025-2026 is forecasted to remain within the target of 2.5 percent plus or minus 1 percent, thus the room for accommodation remains, but exchange rate stability is considered a priority amid global uncertainty.
Looking at the micro side, the transmission of interest rate cuts to the banking sector is still slow. Although the BI Rate has decreased by 150 basis points since September 2024, the one-month deposit interest rate only dropped to 4.52 percent and the aggregate credit interest rate was 9.05 percent in September. This is partly due to the high portion of special yield deposits for large customers.
Therefore, BI chooses to wait while accelerating transmission through monetary operations and macroprudential policies, rather than cutting the current policy interest rate.
As a transmission enhancer, BI introduces performance-based and forward-looking Macroprudential Liquidity Incentives effective from December 1, 2025.
The scheme provides liquidity incentives up to 5.5 percent of third-party funds, consisting of a maximum of 5 percent for the acceleration of credit distribution to priority sectors, and up to 0.5 percent for adjusting new credit interest rates following the direction of the BI Rate.
"The sectors to be driven include agriculture-industry-downstreaming, services including the creative economy, construction-housing, as well as MSMEs (Micro, Small, and Medium Enterprises) and green financing. This policy accelerates the decrease in credit rates without compromising rupiah stability," Josua stated.
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