BENGALURU: Indonesia’s rupiah stayed near historic lows and Jakarta equities were headed for their steepest weekly drop since the pandemic on Friday, as investors fretted over policy direction following an outsized rate hike.
The rupiah weakened about 0.5 percent to 17,720 per dollar by 0654 GMT, hovering near the record low of 17,745 touched earlier this week.
The currency has lost nearly 6 percent this year, making it one of Asia’s worst performers, as higher oil prices, elevated US yields and a stronger dollar pressure import-heavy economies.
Bank Indonesia surprised markets with a 50-basis-point rate hike this week to support the rupiah, even as inflation remains contained. The government also unveiled an ambitious plan to centralise exports of key commodities.
“The high yield environment globally is generally not good for IDR,” Jain said, adding that markets could test BI at future meetings by pushing dollar/rupiah and bond yields higher.
Jakarta shares edged up 0.4 percent on the day, suggesting some bargain-hunting after a bruising selloff, but the benchmark remained on course for its steepest weekly fall since March 2020.
The index fell for eight straight sessions through Thursday, shedding more than 15 percent over that stretch. It is down about 29 percent this year.
Much of the recent equity-market anxiety has centred on plans to tighten control over coal and other commodity exports, raising fears of sales disruptions, tighter curbs on private firms and weaker earnings visibility in a key FX sector.
Efforts to curb export value manipulation, including mis-invoicing and illegal mining practices, would be positive for Indonesia in the long run, but private firms may see the tighter rules as negative, said Chandresh Jain, emerging market Asia rates and FX strategist at BNP Paribas.
The Indian rupee was little changed after a run of record lows, with traders citing likely dollar-selling intervention by the Reserve Bank of India.
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