Indonesia's BI bolsters defenses amid Middle East conflict

 Indonesia’s central bank is strengthening external resilience and optimizing monetary instruments to shield the economy from escalating Middle East tensions, Senior Deputy Governor of Bank Indonesia Destry Damayanti said on Thursday.

The moves aim to stabilize the rupiah as global market volatility surges. Bank Indonesia (BI) remains committed to proactive adjustments to maintain national economic stability during the 2026 Eid al-Fitr holiday period.

Destry confirmed the central bank will maintain rupiah stability while domestic markets are closed. She noted that offshore rupiah trading continues to fluctuate, which could potentially impact the domestic economy upon the market's reopening.

The rupiah closed Tuesday at Rp16,997 per US$, while the Jakarta Interbank Spot Dollar Rate (JISDOR) hit Rp16,982. The currency weakened 1.29 percent through mid-March, mirroring a broader decline in non-dollar currencies amid heightened geopolitical risks and global market uncertainty.

Portfolio investments recorded a net outflow of US$1.1 billion in March due to global instability. This followed accumulative net in flow of US$1.6 billion during the first two months of the year, despite a narrowing trade surplus in January.

Trade performance showed signs of cooling as the surplus dropped to US$1.0 billion from US$2.5 billion in December. This decline was primarily driven by softening demand for non-oil and gas exports in the global market.​​​​​​​

Despite these pressures, Indonesia’s foreign exchange reserves remained robust at US$151.9 billion as of late February. This provides 6.1 months of import coverage, well above international adequacy standards for government debt and import financing.