JAKARTA — Bank Indonesia (BI) has reaffirmed its commitment to maintaining stability in the domestic foreign exchange market, announcing proactive measures to steady the rupiah alongside new restrictions on foreign currency purchases.
According to TradingView data, the rupiah weakened by 0.53% to 17,879 against the US dollar in offshore trading on Friday, May 22, 2026. This depreciation coincided with the Iduladha 1447 H public holiday period.
Ramdan Denny Prakoso, Head of the Communications Department at Bank Indonesia, identified two primary drivers behind the mounting pressure on the currency: shifting global geopolitical sentiments and seasonal domestic demand for foreign exchange. Externally, ongoing uncertainty stemming from escalating tensions in the Middle East continues to weigh on market confidence.
The Pressure of Seasonal Demand
“Furthermore, we are observing a seasonal surge in foreign exchange requirements, particularly for external debt repayments and dividend repatriations, occurring at a time when US dollar inflows remain constrained,” Denny explained on May 29, 2026.
In response to these conditions, Ramdan emphasized Governor Perry Warjiyo’s directive that the central bank remains vigilant in safeguarding exchange rate stability around the clock. To achieve this, Bank Indonesia is actively utilizing a mix of interventions, including transactions in the Non-Deliverable Forward (NDF) offshore market, spot market operations, Domestic Non-Deliverable Forward (DNDF) trading, and the purchase of government securities (SBN) in the secondary market.
Monetary Policy and Market Confidence
The central bank has also bolstered its monetary policy mix by setting interest rates that remain pro-market. This strategic approach is essential to preserve the appeal of domestic financial assets, ensuring they remain attractive to foreign capital inflows. During the May 2026 Board of Governors meeting, the bank raised the BI Rate by 50 basis points to 5.25%.
Tightening Foreign Exchange Regulations
To further curb speculative activity and reduce unproductive demand for the US dollar, Bank Indonesia has introduced a new threshold policy for foreign currency purchases. Effective June 2026, the bank has capped the purchase of foreign currency against the rupiah—without an underlying economic transaction—at a maximum of US$25,000 per party per month.
Alongside these stricter limits, the central bank is intensifying its oversight of market participants. “Bank Indonesia continues to strengthen coordination with relevant authorities to bolster financial market stability. This includes heightened supervision of banks and corporations that demonstrate high volumes of US dollar purchasing activity,” Denny added.
Moving forward, the central bank maintains that it will continue to monitor global and domestic financial market dynamics closely. Bank Indonesia stands ready to implement necessary strategic measures to mitigate rupiah volatility and uphold the external resilience of the national economy.
Summary
Bank Indonesia has implemented stricter regulations to stabilize the rupiah, which recently weakened to 17,879 against the US dollar. This pressure is driven by global geopolitical tensions in the Middle East and seasonal spikes in foreign exchange demand for debt repayment and dividend repatriation. To address these challenges, the central bank has raised the BI Rate to 5.25% and is actively intervening through spot, NDF, and DNDF market operations.
Effective June 2026, Bank Indonesia is capping foreign currency purchases without underlying economic transactions at US$25,000 per party per month. The central bank is also increasing oversight of banks and corporations with high volumes of dollar transactions to curb speculative activity. These measures are designed to preserve market confidence, attract foreign capital, and maintain the overall stability of the national economy.
