Bank Indonesia's Monetary Policy Analysis in Maintaining Rupiah Exchange Rate Stability Amid Global Uncertainty

Abstract

The rupiah exchange rate is one of the most sensitive variables in the Indonesian economy. When global conditions deteriorate, the rupiah is usually the first to feel it. Throughout 2024-2025, the pressure is coming from multiple directions at once: the escalation of U.S. tariffs on China, the economic slowdown of major trading partners, and geopolitical tensions that show no signs of abating. This study explores how BI manages its monetary policy mix under these conditions, with a focus on the rupiah exchange rate stabilization strategy throughout 2024-2025. The method used is qualitative descriptive based on document studies. All data is sourced from BI's official publications - the quarterly Monetary Policy Report, the press release of the Board of Governors Meeting, official statements, and regulatory documents - which are publicly accessible on bi.go.id. The findings of the study show that BI does not rely on a single instrument. BI-Rate will be cut by 150 bps gradually to touch 4.75% from September 2024, while on the other hand, BI is actively intervening in the foreign exchange market through three simultaneous channels: spot markets, off-shore NDFs in Singapore and Hong Kong, and domestic DNDFs that do not deplete foreign exchange reserves. SRBI and SVBI instruments are optimized to manage liquidity, while DHE SDA policies and LCT expansion are used as medium-term structural strategies. The results are not bad for a high measure of global uncertainty. Foreign exchange reserves remain in the range of USD148-156 billion throughout 2025 - above international adequacy standards - and the volatility of the rupiah is relatively controlled compared to many other emerging market currencies.