TEMPO.CO, Jakarta - Bank Indonesia`s (BI) board of governors` meeting today resulted in a decision to increase the 7-Day Reverse Repo Rate (7DRR) by 25 bps to 4.75 percent. The deposit facility rate and the lending facility rate are also raised by 25 bps to 4.0 percent and 5.5 percent, respectively.

The decision is put into effect starting tomorrow, May 31, 2018.

BI governor Perry Warjiyo said the central bank decided that raising the benchmark rates is a better anticipative measure to keep the rupiah at bay against the US dollar, especially with America's plan to raise their interest rates further.

Read: Kalla Wants BI to Intervene Rupiah Prevent Sudden Plunge

"The decision is a short-term policy to maintain the rupiah stability," Perry said on Wednesday.

BI will also apply other policies such as double interventions in the bond market and currency market, maintaining liquidity, monetary operations in inter-bank money markets, as well as communicating intensively with market actors to shape rational expectations that can mitigate overshooting the currency value.

BI will also continue to calibrate global economic developments to make use space for measured interest rate increases.

BI had recently raised interest rates by 25 bps. In one month, the rates have been raised by 50bps, all done in a bid to stabilize and strengthen the rupiah's value.

Bisnis.com