(Bloomberg) -- Indonesia’s central bank will likely hold its benchmark interest rate steady, while sticking to a hawkish tone to stabilize the local currency weighed down by fiscal worries.

Thirty of the 33 economists surveyed by Bloomberg expect Bank Indonesia to keep the benchmark BI-Rate unchanged at 6.25% for a second straight meeting on Thursday. The rest expect a quarter-point hike.

The monetary authority will probably make up for the lack of action with ample assurance that it stands ready to support the rupiah, which has emerged as Asia’s biggest loser this month. Repeated interventions have failed to stop the currency from weakening past the 16,300-a-dollar waterline that policymakers marked last week.

Here’s what to watch out for in the BI rate briefing starting 2 p.m. local time:

Rupiah Woes 

Investors will be watching for Bank Indonesia’s assessment on the rupiah, which has touched fresh four-year lows since the central bank’s last policy meeting in May.

The local currency, which closed at 16,365 against the greenback on Wednesday, has weakened 0.7% so far in June as investors fretted over reports that incoming President Prabowo Subianto may increase Indonesia’s debt ratios to fund his populist campaign promises, although no plan has been formalized. There’s also high domestic demand for the greenback as stock investors repatriated dividends and sold their holdings.

BI has stepped into the FX market throughout June to stem the rupiah’s depreciation. It’s also ramped up sales of its rupiah securities to lure inflows, awarding a record amount of the so-called SRBI notes at the June 12 auction. 

That the rupiah’s woes partly stem from “potential policy changes rather than deeper concerns over interest-rate differentials or economic fundamentals” makes Barclays Plc economist Brian Tan believe that policymakers will look through the latest spell of currency weakness.

What could give the central bank more confidence to keep borrowing costs steady are also signs of a recovery in the currency and a pick-up in the latest trade surplus. Also, inflation has been behaving well, with both the headline and core measures trending within the central bank’s target range of 1.5%-3.5% so far this year.

“BI will prefer to lean on intervention and other tools to restore currency stability in the month ahead,” said Tamara Henderson, an economist at Bloomberg Economics. 

More Hikes

But then there are others who are convinced hikes aren’t off the table yet.

“More than the global catalysts, markets are displaying nervousness on domestic cues — such as the direction of fiscal policy in particular and the broader macro stability in general — ahead of the change in political guard,” said Radhika Rao, an economist at DBS Group Holdings Ltd. She expects hikes to remain on the table if stepped-up interventions are unable to contain the currency’s weakening bias.

Rajeev De Mello, a global macro portfolio manager at GAMA Asset Management SA in Singapore, concurs with the view that hikes are very much an option. “The more they talk about a certain level, the more difficult it makes life for them without any fundamental adjustment,” he said.

A further delay to the Federal Reserve’s pivot to rate cuts and a widening of the current-account deficit at home may force BI to tighten monetary policy again, said Fakhrul Fulvian, an economist at PT Trimegah Sekuritas Indonesia, who’s among the few who expect a rate hike on Thursday.

Given the uncertainty that still lies ahead, “for BI, it will all be about keeping the much-needed inflows for the rupiah,” Fulvian said.

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