Rate hike would provide only brief respite for rupiah

The Indonesian rupiah has continued to slide over the past week and, while we think intervention in the foreign exchange market will remain Bank Indonesia’s primary course of action to prop up the currency, the chances of an interest rate hike on Wednesday are building. Even that would provide only brief respite though. Putting the currency on a more solid footing ultimately requires the authorities to shift away from the populist and interventionist policies adopted since President Prabowo came to power.