Indonesia Raises Interest Rates

Indonesia has hiked interest rates to 6.75% amid rising inflation and investor worries.

 

In a statement, Bank Indonesia says it will keep a close watch on future inflation developments and strengthen the rupiah exchange rate policy in line with measures to curb future inflationary pressures in addition to the macroprudential policies introduced in 2010.

 

Southeast Asia's largest economy has resisted raising interest rates, fearing higher rates would attract even more investors, putting pressure on its currency to rise, reports the Wall Street Journal.

 

In 2010, Indonesia intervened in currency markets, selling rupiah for dollars to prevent its currency from accelerating too quickly and making its products less competitive, says the Journal.

 


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