Indonesia is doing its bit to curb volatility

The International Monetary Fund (IMF) backed Indonesia’s response to a sell-off in its currency, saying higher interest rates and foreign exchange intervention were appropriate steps to help lessen the volatility.

Authorities can’t get too comfortable though, and should continue to reduce the risks that make the economy vulnerable to foreign outflows, according to Luis Breuer, IMF’s division chief for Indonesia.

“Overall, the policy reaction has been broadly appropriate but obviously things can change quickly and this calls for vigilance,” he said.

Southeast Asia’s biggest economy has been rattled by the emerging market rout, with the rupiah dropping to a two-decade low of 15,000 to the dollar this month.