BI Governor Perry Warjiyo announced the 25 basis points (bps) hike in a statement on Tuesday, lifting the benchmark rate to 5.5 percent, less than three weeks after a stronger-than-expected 50-bps hike last month.

“Bank Indonesia considers it necessary to take further measures to strengthen rupiah exchange rate stabilization by once again raising yields and providing a number of other incentives to encourage foreign investment inflows,” said Perry.

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The central bank normally makes rate decisions after a scheduled monthly board of governor meetings that typically falls in the third week of the month. This hike comes just a week before another decision is set to be made on June 18.

The rupiah strengthened immediately from around Rp 18,180 per US dollar minutes before the announcement was made to around Rp 18,020 afterward.

The government’s 10-year bond yield had also immediately spiked from around 7.1 percent to 7.3 percent.

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