JAKARTA (Yosefardi) – Bank Indonesia has on Thursday (August 29) decided to raise BI Rate to 7% from previous 6.5% as an effort to help the rupiah which has substantially dropped against the US Dollar.
Currently the rupiah has recovered to Rp10,936 per dollar, after reached Rp11,300 recently.
BI Rate hike will attract back investors to place their funds in Indonesian financial instruments. The recent capital outflows was the main factor of rupiah hefty drop.
In addition, BI also decided to increase interest of lending facility by 25 bps to 7% and raised interest of deposit facility by 50 bps to 5.25%.
BI will also cut month-holding-period of BI Certificate (SBI) to one month from current six months.