Bandung. Bank Indonesia said it will continue intensifying intervention in domestic and offshore financial markets to support the rupiah and maintain stability, as global geopolitical tensions linked to conflict in the Middle East continue to unsettle markets.

The central bank said that while intervention measures do not always result in an immediate strengthening of the currency, they have helped prevent deeper depreciation of the rupiah.

“We continue to strengthen intervention through the spot market, domestic non-deliverable forwards (DNDF), and transactions in offshore markets. In a situation like this, without intervention, the rupiah could weaken further,” said Juli Budi Winantya, Director of the Economic and Monetary Policy Department at Bank Indonesia.

His remarks responded to criticism that the central bank’s market intervention was akin to “salting the ocean” -- a futile effort that only wastes resources.

Juli said the stronger intervention stance reflects Bank Indonesia’s commitment to preserving stability. The central bank is also optimizing its broader monetary policy mix, including strengthening money market instruments to stabilize the exchange rate while supporting external resilience and economic growth.

Bank Indonesia projects Indonesia’s economy will grow between 4.9% and 5.7% in 2026, while maintaining an inflation target of 2.5%, with a deviation range of plus or minus one percentage point.

According to the central bank, external pressures remain elevated, driven largely by geopolitical conflict in the Middle East that has pushed up energy and commodity prices due to disruptions in production, distribution, and major global shipping routes.

Those disruptions have also lifted global food and commodity prices, adding to inflationary pressure. As a result, Bank Indonesia revised down its global growth forecast to 3.0% from 3.1%, while raising its inflation projection to 4.2% from 4.1%.

With weaker global growth and rising inflation, the central bank sees less room for monetary easing worldwide. Policymakers also expect major central banks, including the Federal Reserve, to keep interest rates higher for longer amid heightened geopolitical uncertainty.

That environment has pushed up yields on US Treasury securities and strengthened the US dollar, increasing pressure on capital flows in emerging markets, including Indonesia.

“The attractiveness of US financial assets has increased, resulting in a shift in global capital flows,” Juli said.

Still, he noted that Indonesia’s trade balance remains in surplus, supported mainly by non-oil and gas exports. Foreign exchange reserves stood at $148.2 billion in March 2026, which the central bank said remains sufficient to safeguard external stability.

Bank Indonesia pledged to continue monitoring global developments and strengthen its policy response to preserve macroeconomic and financial system stability.

The rupiah closed at Rp 17,229 per dollar last Friday, strengthening 57 points, or 0.33%, from the previous close of Rp 17,286. A day earlier, the currency had weakened to Rp 17,304 per dollar, its lowest level on record.

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