[JAKARTA] Indonesia's central bank is expected to keep its benchmark interest rate unchanged on Wednesday despite a plunge in the rupiah amid an emerging market sell-off, a Reuters poll showed, although some economists say it will be a close call.

Out of 19 economists in the poll, 13 see Bank Indonesia (BI) holding the 7-day reverse repurchase rate steady at 5.25 per cent.

The other six forecast a 25-basis point hike. Four of those initially pencilled in a hold, but changed their views after the rupiah on Monday fell by more than 1 per cent to its weakest since October 2015, before paring some of that loss.

Wednesday's decision "was going to be a close call anyway and it looks like it will be closer still," said Nagutha Mohamed Faiz, Singapore-based ASEAN economist at Bank of America Merrill Lynch.

He maintained his view that BI will hold to "save their bullet for the September meeting", which will end only hours after one in Washington where the Federal Reserve is expected to hike US rates for the third time this year.

Between mid-May and the end of June, BI increased its key rate three times by a total of 100 basis points. On Monday, it intervened to defend the rupiah, a senior official told Reuters, as investors sold Indonesian assets due to a spill-over effect from a crisis in Turkey and Indonesia's large current account deficit in the second quarter.

Dody Budi Waluyo, a deputy governor, said BI will mix its interest rate policy with a gradual depreciation of the rupiah and market intervention, stressing that it had means to stabilise the currency.

Guarding the rupiah has been BI's and the government's economic priority.

Last month, President Joko Widodo said Southeast Asia's largest economy "needs dollars now" amid worries the rupiah would keep weakening as US rates rise and global trade tension intensifies.

Mr Joko will hold a cabinet meeting later on Tuesday on strategy to bolster foreign exchange reserves.

In September, Indonesia will implement a plan to widen use of biodiesel to cut dollar demands for fuel imports. Ministers will review infrastructure projects to reduce imports of capital goods.

In the second quarter, Indonesia grew at the fastest pace in 4-1/2 years, at 5.26 per cent, although growth may be hurt by higher interest rates and weaker rupiah in coming quarters.

July's annual inflation rate, at 3.18 per cent, was well inside BI's target range, and governor Perry Warjiyo said there had been no sign of imported inflation as of last month.

ANZ has called for a rate hike on Wednesday, citing a US$13.7 billion decrease in foreign exchange reserves from February through July as a main reason.

"We think there is little room for complacency," ANZ economist Sanjay Mathur said in a client note.

REUTERS