he Indonesian currency has touched a new nadir as the uneasy ceasefire in the United States-Israel war on Iran presents no reassurance for investors, prompting capital outflows from emerging markets and dragging down currencies across Asia.
However, analysts noted that the rupiah is taking a heavier hit than its peers, weighed down by ‘domestic vulnerabilities’ such as mounting fiscal concerns over rising fuel subsidy costs.
Readings from Investing.com show the rupiah hitting Rp 17,310 per US dollar during Thursday trading, breaching its lowest-ever valuation of Rp 17,300 recorded during the Asian Financial Crisis in 1998.
Destry Damayanti, senior deputy governor of Bank Indonesia (BI), told The Jakarta Post on Thursday that the pressures were “mainly caused by increasing global uncertainty, that’s why currencies in the region experience the same pressure”.
She went on to say that BI would keep intervening in both offshore and onshore markets “to maintain exchange rate stability” and attempt to attract capital to domestic assets by “strengthening interest rate structure”.
Coordinating Economy Minister Airlangga Hartarto said on Thursday that the drop was caused solely by external factors and that the government would “monitor” the development, while likewise pointing out that other Asian currencies were equally volatile.
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The dollar exchange rate strengthened against most currencies on Thursday whereby Southeast Asia suffered the hardest hit, according to readings from Bloomberg.