JAKARTA: On Monday (Jul 8), Indonesia’s central bank governor indicated a possibility for an interest rate reduction in the fourth quarter, contingent on the rupiah’s stability. Currently, the bank’s priority remains maintaining currency stability.

Last month, the rupiah plunged to a four-year low of 16,475 per US dollar, driven by a strong dollar and concerns over the spending plans of the incoming government.

Bank Indonesia (BI) Governor Perry Warjiyo noted that the rupiah is starting to stabilize after recent volatility. He expects the currency to strengthen later this year, partly due to a likely rate cut by the US Federal Reserve.

BI projects the rupiah to average between 15,700 and 16,100 per dollar this year. As of 0821 GMT, it was trading at 16,250 per dollar.

“We will assess if there is room for easing in the fourth quarter,” Warjiyo said. “For now, our priority is maintaining currency stability.”