Rupiah Slumps as Stronger Dollar and Higher Yields Bite
Indonesia's rupiah is set for its biggest weekly fall since late May due to rising US Treasury yields and a stronger dollar. The currency extended losses, weakening by as much as 0.3% to 17,935 per dollar on Friday.
Bank Indonesia kept its benchmark interest rate unchanged at 5.75%, signaling it would rather support the rupiah through market-based measures. Analyst Lukman Leong of Doo Financial Futures said a more credible fiscal policy and central bank intervention are needed to stabilize the currency.
The rupiah has fallen 7% among emerging Asian currencies, with recent weakness in Indonesian equities adding to its vulnerability. The US dollar climbed over 1% this week, hitting a two-month high and contributing to regional currencies' woes.