Indonesia lifts rates to 5.5% in surprise move to shore up rupiah

Bank Indonesia raised its benchmark interest rate by 25 basis points to 5.5% on Tuesday in an unscheduled move aimed at slowing the rupiah's slide. The currency, among the world's weakest this year, had touched a record low of 18,190 per US dollar on Monday before firming slightly after the decision. The central bank said the rupiah had weakened more than expected since its last meeting and linked the pressure to global volatility tied to the Middle East war. BI had already lifted rates by 50 basis points in May, while foreign exchange reserves have fallen by about $12 billion this year as authorities intervened to support the currency. The bank said the latest step should also help attract foreign portfolio inflows and keep inflation within target in 2026 and 2027.