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JAKARTA — Indonesia’s central bank has and will continue to intervene in the currency market amid volatility linked to the closure of some U.S. banks, its governor said on Thursday, after leaving interest rates unchanged for a second straight meeting.

Bank Indonesia (BI) Governor Perry Warjiyo noted that the closure of three U.S. banks and problems at Credit Suisse have increased market uncertainty, halting capital flows to emerging markets and pressuring currencies, but he underlined that he saw no direct impact on local banks.

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The central bank left unchanged its benchmark 7-day reverse repurchase rate at 5.75%, where it has been since January, as predicted by all 30 economists polled by Reuters.

Seeking to reassure markets, the governor said based on BI’s stress test local banks were resilient, with low non-performing loan and high capital adequacy ratios, as well as diverse funding sources.

“Our stress test assessment concluded that Indonesia’s banking conditions are resilient to this impact and frankly we are continuing to monitor it,” Warjiyo told a news conference.

Brushing off fears about a brewing global banking crisis, Warjiyo said President Joe Biden’s measures would be enough to contain trouble in the U.S. banking sector.

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He also said he did not think the collapse of some U.S. banks would affect the trajectory of the Federal Reserve’s monetary tightening.

However, BI would continue to watch market perceptions of global banking conditions, he said.

The governor reiterated that BI’s rate hikes – totalling 225 basis points between August to January – were adequate to ensure headline inflation return to its target range starting in September, despite inflation picking up slightly in February to 5.47%.

To mitigate global risks, “we stabilize the rupiah. We intervene,” Warjiyo added.

The rupiah was little changed after the rate decision. The currency had dropped more than 0.5% against the dollar in early Thursday trading but regained some of the losses.

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The rupiah and many other emerging market currencies have been volatile in recent days as markets reacted to news of the collapse of the U.S. banks and its possible effect on the pace of the Federal Reserve’s monetary tightening.

Radhika Rao, senior economist at DBS Bank in Singapore, said the decision to keep rates unchanged indicated BI’s “confidence on the evolving inflation-growth path.”

“The forward looking bias will be to keep rates on hold, albeit policy guidance could reflect a preference to stay nimble to backstop the currency, in case of volatility in the global FX markets,” said Rao.

The central bank kept its 2023 growth outlook for Southeast Asia’s largest economy at the upper end of a 4.5% to 5.3% range and a current account forecast range of between a deficit of 0.4% of gross domestic product to a surplus of 0.4% of GDP. (Reporting by Gayatri Suroyo, Fransiska Nangoy and Stefanno Sulaiman; Editing by Ed Davies, Martin Petty and Kim Coghill)