Bank Indonesia’s off‑cycle rate hike on June 9 underscored just how alarmed policymakers are about the trajectory of Southeast Asia’s largest economy. It also serves as an early warning to the rest of the world about the financial and economic storm clouds gathering over emerging markets.
BI’s 25‑basis‑point increase, which lifted the benchmark rate to 5.50%, was aimed squarely at stabilizing the rupiah, which recently touched a record low, breaching 18,000 to the dollar.
Indonesia’s currency is hardly alone: the rupee is sliding to fresh lows despite heavy Reserve Bank of India intervention, the Philippine peso is under acute pressure, the South Korean won is tumbling even as global funds pile into Seoul’s equity rally and the Malaysian ringgit continues to weaken.
