Bank Indonesia Intervenes as Rupiah Approaches Record Low Against Dollar

Bank Indonesia conducted foreign exchange operations on January 14, 2026, selling U.S. dollars to support the rupiah amid record depreciation pressures. The rupiah reached a session low of 16,480 per dollar, approaching its all-time weakest point of 16,492 recorded in 2023. This level represents a 12.3% decline from the 2025 average rate of 14,670, underscoring heightened currency volatility. The central bank’s actions included a net sale of $280 million in foreign reserves, reflecting increasing defensive measures to curb market panic. The rupiah’s weakening trend is driven by a combination of external and domestic factors. Global bond yields have risen, with the 10-year U.S. Treasury yield surpassing 5.1%, prompting capital outflows from emerging markets. Locally, foreign direct investment inflows slowed in Q4 2025, down 18% compared to the previous quarter, while current account deficit widened to 2.9% of GDP in the final quarter of 2025. These developments have intensified speculative selling on the rupiah, with forward contracts indicating a 6.4% expected depreciation over the next 12 months. Market participants are closely monitoring Bank Indonesia’s response. Analysts note that while the central bank has maintained a neutral policy stance, with the benchmark 7-day reverse repo rate held at 6.5%, its active intervention signals growing concern over financial stability. The central bank’s foreign exchange reserves stood at $142.3 billion as of January 10, down from $154.7 billion at the start of the year, indicating a gradual depletion of buffers. The rupiah’s performance is now a key focus for macroeconomic policymakers ahead of the upcoming February 2026 monetary policy meeting.