Bank Indonesia Governor Destry Damayanti told lawmakers at a parliamentary hearing on Monday that the central bank has significantly reduced costly spot market intervention operations.

Spot transactions currently account for only about 30% of total foreign exchange intervention, Destry said.

She noted that spot intervention was previously the main method used by Bank Indonesia to stabilize the exchange rate, directly drawing down foreign exchange reserves.

Bank Indonesia is increasingly turning to domestic non-deliverable forwards (DNDF) and offshore non-deliverable forwards (NDF) instruments, which Destry said have proven effective.

However, the Indonesian rupiah remains under pressure due to fundamental and structural factors.

Bank Indonesia is continuing discussions on the matter with the Financial System Stability Committee, which includes the Ministry of Finance and the Financial Services Authority.

"Even with large-scale intervention, if external sector fundamentals remain weak, the situation will inevitably be challenging," Destry said.

Citing its latest assessment, Bank Indonesia said that assuming other policies remain unchanged, a 25 basis point increase in the policy rate would reduce economic growth by about 0.1 percentage point.

Some lawmakers asked why Bank Indonesia kept its policy rate unchanged after the Federal Reserve's recent rate hike.

Destry responded that relying solely on rate hikes would cause further economic slowdown.

The core of Bank Indonesia's policy remains stability, while using a mix of tools to support sustainable growth, consistent with its expanded policy objectives.

"Stability remains our policy anchor. We have always emphasized the policy mix because we understand that stability cannot be solved by interest rates alone, and other supporting policies are also needed," she said.

Bank Indonesia reiterated that it is currently relying on lower-cost hedging tools and other targeted incentives to attract capital inflows, rather than raising the Bank Indonesia policy rate, which would suppress overall economic growth.

Bank Indonesia will continue to evaluate incentive policies and their implementation effects.

Although headline inflation is above 3% due to food price fluctuations, core inflation remains around 2%, and Bank Indonesia considers the current inflation level manageable.

Indonesia's output gap remains negative, meaning the economy still has room for expansion without significantly increasing price pressures.