Indonesia's central bank has taken the unusual step of raising interest rates to stem a sharp decline in the rupiah, a move that signals growing concern over capital outflows and external vulnerabilities in the region's largest economy.
The surprise decision comes as policymakers attempt to restore confidence in the currency amid a broader wave of selling pressure across emerging Asian markets.
The rupiah has weakened significantly against the US dollar in recent sessions, driven by a combination of strong dollar demand and shifting global risk sentiment.
The central bank's intervention aims to narrow the yield gap that has made holding rupiah-denominated assets less attractive to foreign investors.
This tightening cycle contrasts with the accommodative stance maintained by several regional peers, highlighting the unique pressures facing Jakarta.
The move echoes similar stabilization efforts elsewhere in Southeast Asia, where central banks are increasingly intervening to manage currency volatility.