However, Sugandi said it is most likely that Indonesia’s central bank (Bank Indonesia) will raise the BI rate by 25 basis points to 7.75 percent later this year when the US Federal Reserve introduces higher borrowing costs. Another interest rate cut this year is highly unlikely as the rupiah has been under severe depreciating pressures. The last time Bank Indonesia cut its BI rate was in February 2015 (25 basis points). Sugandi expressed these views during a panel discussion on "Challenges and Opportunities in Developing Midsized Companies in Indonesia" in Jakarta on Monday (29/06).

Moreover, Indonesian inflation has been accelerating in recent months and may touch 7.40 percent (y/y) in June 2015 due to the impact of the Ramadan month, thus further limiting room for the central bank to cut its interest rate regime.

Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) depreciated 0.13 percent to IDR 13,356 per US dollar on Monday.

Indonesian Rupiah versus US Dollar (JISDOR):

| Source: Bank Indonesia