Indonesian Rupiah in the Doldrums
Bank Indonesia Taking Urgent Steps to Bolster a Weakening Rupiah Down 11.7% Since January 1, 2018
As of Friday, August 31, 2018, the Indonesian Rupiah was trading at Rp. 14,844 to the U.S. Dollar - a decline in the value of the Indonesian currency of Rp. 1,563 against the greenback since January 1, 2018.
Reuters and detikfinance.com report the 11.7% decline in the value of the Rupiah precipitated urgent intervention by Bank Indonesia to shore up the values of the Indonesian currency. A recent sharpening decline in the value of the Rupiah has caused Bank Indonesia to intensify protective step for the exchange value of the Rupiah in the final days of the month of August.
At the same time, Bank Indonesia is acquiring bonds and government securities on secondary markets from foreign owners. On Friday morning August 31st alone, Bank Indonesia had purchased Rp. 3 trillion in government securities.
Financial observers, including the Indonesian Coordinating Minister Darmin Nasution, cite global sentiment triggered by a 60% increase in Argentinian interest rates as causing volatility in the value of the Indonesian Rupiah
US$50 billion in financial support from the International Monetary Fund had failed to stem high rate of capital outflow in Argentina.
According to the Associated Press, Indonesia was joined in exchange value woes by the Indian Rupee that dipped to record lows. Additional jitters fueling a distaste for developing country currencies is the deepening financial crisis in Turkey and fears that the U.S. Trump administration will impose US$ 200 billion in customs tariffs on Chinese exports.