Indonesia's new central bank governor stated that while reducing costly spot market interventions and relying more on derivatives, the intensity of defending the rupiah remains unchanged.

"We are diversifying our instruments, but the policy intensity of maintaining rupiah stability remains unchanged," Governor Destry Damayanti said in an interview on Thursday. This was her first exclusive interview since taking office last month.

Destry disclosed earlier this week that spot transactions currently account for only about 30% of total foreign exchange intervention, with the remaining intervention operations conducted in offshore and onshore non-deliverable forward (NDF) markets to protect foreign exchange reserves.

Indonesia's foreign exchange reserves stood at $146.5 billion in August. In recent months, as the central bank expanded its use of non-deliverable forward instruments, the scale of foreign exchange reserves has tended to stabilize.

Destry said the mix of intervention instruments depends on market conditions, and the central bank evaluates the source and urgency of dollar demand on a case-by-case basis. The central bank also encourages companies with debt repayment plans to use derivatives for hedging when they do not immediately need dollars.

But she said: "If dollar supply in the spot market truly shrinks and demand is high, we have no choice but to step in and intervene in the spot market."

"Ultimately, monetary operations are an art," she added.

Since Destry took office, the rupiah has come under pressure again. In early September, the exchange rate was around 17,700 rupiah per dollar, and later in the month it briefly fell below 18,000. Rising oil prices and higher US Treasury yields have hit emerging market assets, including Indonesian assets. The rupiah has depreciated about 7% this year, making it Asia's worst-performing currency.

Destry said the central bank is also cautiously using the offshore non-deliverable forward market, especially since multiple rounds of global market volatility triggered by Trump's tariffs last April. The move aims to prevent sharp sentiment-driven fluctuations in the non-deliverable forward market outside local Indonesian trading hours from transmitting to the onshore exchange rate after the Indonesian market opens.

Facing the impact of a stronger dollar, rising US Treasury yields and high oil prices, the central bank's targeted adjustment approach is also reflected in monetary policy. Once the interest rate differential between Indonesian government bonds and US Treasuries narrows, capital will flow out of Indonesian assets and the rupiah will weaken accordingly.

"Maintaining the interest rate differential that investors receive at a relatively controllable cost is crucial. Capital has no loyalty," she said, adding that Indonesia is competing with emerging economies such as the Philippines and India for international capital.

Indonesia's central bank relies partly on targeted measures such as hedging incentives to maintain the interest rate differential, rather than relying solely on raising interest rates. Destry said such measures can bring investors an effective net interest rate differential improvement of about 40 to 50 basis points and have already attracted capital inflows into government bonds and the central bank's rupiah securities (SRBI).

Destry said monetary policy takes stability as its primary objective. She reiterated that the central bank's cumulative 100 basis point rate hike in the second quarter was a preemptive move to guard against rupiah risks. Asked about future policy moves, she stressed that the central bank will continue to make data-based decisions.

She also said the central bank also wants to support economic growth, as the economy has not yet reached full capacity. Inflation is currently mainly driven by supply-side factors, and relying solely on interest rate tools to curb price pressures has limited effect.

Speaking about the central bank's newly added broad policy objective of supporting economic growth, Destry said this does not mean placing growth above stability. Real economic growth and job creation are premised on stability. "We are working together across all parties to continuously promote economic growth and pursue sustainable growth."