The rupiah slipped past Rp16,600 against the U.S. dollar on Monday, September 22, 2025, pressured by both global and domestic factors, Indonesian Central Bank (BI) Governor Perry Warjiyo told legislators in a hearing with Finance Commission XI of the House of Representatives (DPR).

“Over the past several days, the rupiah weakened beyond Rp16,500 due to external and internal pressures. But BI remains firmly committed to maintaining exchange rate stability,” Perry said.

The rupiah’s decline followed a period of relative stability. Earlier this year, the currency briefly broke the Rp17,000 mark after U.S. President Donald Trump announced reciprocal tariffs. BI interventions subsequently strengthened the rupiah to around 16,300 before the latest round of weakness.

To stabilize the currency, Perry said BI has intervened in offshore non-deliverable forwards, spot and cash transactions, as well as in the domestic forex market. The central bank has also purchased government bonds in the secondary market to boost liquidity.

“We view the rupiah exchange rate as a crucial component of economic and national stability,” Perry stressed.

The rupiah’s recent weakness has been partly attributed to the U.S. Federal Reserve’s decision to cut its policy rate by 25 basis points this month to 4.25 percent amid rising unemployment and slowing inflation in the US.

Outlook on Fed, BI rates

Perry said BI expects the Fed to lower rates at least once more in 2025, though markets are betting on two cuts. Lower US yields are likely to drag down the dollar index over time.

Despite that outlook, Perry noted that capital flows to emerging markets such as Indonesia remain volatile. BI recorded a net foreign outflow of Rp8.12 trillion (US$488.9 million) from September 15 to 18, 2025, with Rp5.49 trillion (US$330.6 million) pulled from government bonds and Rp2.79 trillion (US$168 million) from Bank Indonesia Rupiah Securities (SRBI). Only equities recorded a modest net inflow of Rp160 billion (US$9,63 billion).

Domestically, BI has already cut its benchmark BI Rate by 150 basis points this year to 4.75 percent, the lowest since October 2022, as part of efforts to stimulate credit growth. Deposit facility rates were also lowered to 3.75 percent.

Perry said BI would continue to weigh further rate cuts toward the end of the year, depending on inflation trends and growth prospects.

“We will carefully assess the outlook for growth and inflation in 2025 and 2026, while keeping exchange rate stability in mind,” he said.