Rupiah breaches 15,000 per US dollar
JAKARTA: Indonesia’s rupiah weakened past 15,000 per US dollar for the first time in 20 years amid a souring of sentiment towards emerging-nation assets and as oil prices jumped.
The currency has tumbled almost 10 per cent this year as rising United States interest rates have boosted the US dollar and as the country’s current-account deficit has left the economy exposed to the financial turmoil that afflicted Turkey and Argentina.
Crude prices have almost tripled since February 2016, putting pressure on the oil-importing nation.
“Given the rise in US interest rates, higher oil prices which may see a wider trade deficit, and a stronger US dollar in recent days, it was proving difficult for Bank Indonesia (BI) to hold the line at 15,000,” said Khoon Goh, head of research at Australia and New Zealand Banking Group Ltd in Singapore.
“If sentiment doesn’t improve, we risk further weakness towards the 15,200 region.”
The rupiah has weakened even as BI has consistently intervened to limit its decline and raised interest rates five times since May. The currency dropped to as low as 15,025 per US dollar yesterday, the weakest since the Asian financial crisis in July 1998.
“Indonesia is now a net importer of oil, so the higher crude prices and weaker rupiah are fanning concern that inflation will quicken,” said Toru Nishihama, emerging-market economist at Dai-ichi Life Research Institute in Tokyo.
“With oil prices rising, the Fed (Federal Reserve) normalising policy and Indonesia having fiscal and current-account deficits, negative speculation is harder to contain.”