For a small open economy like Indonesia, exchange rate movement does not always reflect fundamental value. Increasing exchange rate volatility often occurs as a result of volatile capital flows, irrational behaviour of market players, the microstructure conditions of the market, and offshore market influence. In this case, relying solely on interest rate policy to achieve the inflation target and maintain stability is not always sufficient. Our strategy is to include exchange rate policy in the monetary and macroprudential policy mix consisting of five policy instruments, ie interest rate policy, exchange rate policy, management of capital flows, macroprudential policy, and monetary policy communication. Under this framework, foreign exchange intervention is implemented with the primary motivation of stabilizing the exchange rate along its fundamental path and maintaining financial system stability. In the case of Indonesia, the intervention has been able to reduce the inflation pass-through effects of rupiah depreciation due to a recent period of capital outflows and current account deficit. The central bank also performed dual interventions in both the foreign exchange and bond markets to support financial system stability.