Emerging markets everywhere are battening down the hatches to weather the brewing currency storm, and Indonesia is no exception. At the end of September – and ahead of the International Monetary Fund and World Bank meeting in Bali in October – Bank Indonesia raised its benchmark interest rate to 5.75%. This marks the fifth hike since May, for a total rise of 1.5%.
The central bank’s main aim is to shore up the rupiah in the face of a strengthening US dollar, which has been putting pressure on emerging market currencies. The rupiah has fallen nine per cent against the dollar this year, the worst performer in Asia after India’s rupee, according to Bloomberg.
