Brace yourselves: there may be more pain to come for Indonesia’s rupiah.
Analysts say the currency of Southeast Asia’s biggest economy is set to breach the level of 15,000 per dollar for the first time since the depths of the Asian financial crisis in 1998. The rupiah slid as low as 14,782 Monday as the nation’s trade deficit and reliance on oil imports render it vulnerable to the emerging-market selloff triggered by financial turmoil in Turkey and Argentina.
“Fifteen thousand is the next psychological level the rupiah may breach,” said Nick Twidale, Chief operating officer at Rakuten Securities in Sydney. “Investors will be watching the central bank closely to see their next move, with rate hikes only really providing road humps in the rupiah depreciation so far.”
Indonesia’s trade deficit and reliance on oil imports are just “pummeling the rupiah,” said Stephen Innes, head of trading for the Asia Pacific at Oanda Corp. in Singapore.
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