tayed around 159 per dollar even after suspected government intervention, while Japan’s core inflation cooled, which complicates the Bank of Japan (BoJ) case for raising rates. In Indonesia, officials responded more directly: starting June 1, natural-resource exporters must place 100% of their export revenues in state-owned banks, a step First Sentier Investors’ Nigel Foo said is meant to increase the onshore supply of US dollars.
Why should I care?
For markets: Indonesia is using the banking system to steady the rupiah.
Indonesia’s new export-revenue rule is effectively an administrative way to keep more dollars onshore. That can make it easier for local banks to meet day-to-day dollar demand and reduce sudden funding stress around month-end and quarter-end, when companies often need more foreign currency. But investors also tend to read these measures as a sign policymakers are worried about currency stability, which can spill over into how traders price risk across emerging Asian foreign exchange markets.
Zooming out: Intervention works best when rates and inflation back it up.
Japan’s experience is a reminder that selling dollars to prop up a currency can be temporary if interest-rate expectations still favor the US. When inflation is cooling, markets assume the BoJ will be cautious on rate hikes, and that keeps the yen’s underlying support weak. The longer that gap persists, the more Asia’s currencies can take their cue from a soft yen – especially during periods of global uncertainty.
