Jakarta, IDN Times — Fakhrul Fulvian, Chief Economist at Trimegah Sekuritas Indonesia, has praised Bank Indonesia’s (BI) decision to raise the BI-Rate by 50 basis points to 5.25 percent. He described the move as a bold, necessary, and timely step to maintain rupiah stability amidst mounting global pressure, emphasizing that the current economic climate demands a preemptive and decisive monetary response.
“BI’s decision is well-timed. This is not just a simple rate hike; it serves as a crucial signal that Indonesia’s policy anchor remains secure. Delaying this action would have made the cost of stabilization significantly higher,” said Fakhrul on Thursday (May 21, 2026).
1. Potential for Gradual Rupiah Appreciation
Fakhrul believes this rate hike marks a turning point for the local currency. He projects that the rupiah will gradually strengthen toward the Rp16,800 per US dollar range, following a period of overshooting that saw the currency touch the Rp17,300 level.
“The rupiah has finished its overshooting phase. With BI’s decisive response, the market finally has a new anchor,” he noted. Fakhrul added that market participants no longer need to maintain a defensive stance toward the US dollar. He believes that the combination of the BI-Rate hike, forex market interventions, strengthened DNDF/NDF, and the expansion of CNH-rupiah transactions and LCT (Local Currency Transaction) framework will effectively dampen pressure on the rupiah.
“Now is the time to gradually reduce dollar holdings. While global risks persist, Indonesia has finally delivered a robust policy response,” he asserted.
2. The Need to Adjust SRBI Rates
Despite the positive move, Fakhrul warned that the work is far from over. He advised that after the BI-Rate hike, the central bank should consider gradually lowering the SRBI (BI Rupiah Securities) rate to prevent liquidity from being overly concentrated in short-term instruments.
“If the SRBI remains too attractive, funds will continue to pile into short-term instruments. This could disrupt the government bond (SBN) market and hinder the effectiveness of monetary policy transmission,” Fakhrul explained.
3. Normalizing the Yield Curve to Restore Investor Confidence
To encourage renewed investment in long-term bonds and further support the rupiah, Fakhrul emphasized the importance of normalizing the yield curve. “The rupiah requires more than just high interest rates; it needs a market with a clear structure and proven credibility,” he said.
Furthermore, he urged both Bank Indonesia and the Ministry of Finance to maintain strong synergy between monetary and fiscal policies. “BI maintains the anchor of stability, while the Ministry of Finance preserves fiscal credibility. If both act in harmony, the rupiah can strengthen and market confidence in Indonesia’s economic potential will return,” he concluded.
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Summary
Bank Indonesia has raised the BI-Rate by 50 basis points to 5.25 percent, a decisive move praised by economists as a necessary step to stabilize the rupiah amid global economic pressures. This preemptive action is expected to provide a new anchor for the market, potentially allowing the currency to appreciate toward the Rp16,800 per US dollar range. Experts suggest that investors should shift away from defensive dollar holdings as the central bank’s robust policy interventions take effect.
To sustain this momentum, experts advise that Bank Indonesia should gradually adjust SRBI rates to prevent excessive liquidity concentration in short-term instruments. Normalizing the yield curve and ensuring strong synergy between monetary and fiscal policies are also highlighted as critical steps to restore investor confidence. Through these measures, authorities aim to secure long-term economic stability and attract renewed interest in government bonds.
