Indonesian official says rupiah pressure differs from 1998 crisis
The currency opened at Rp18,198 per US dollar on November 12, while Bank Indonesia cited domestic pressures and expectations of higher US interest rates.
Indonesia’s Deputy Coordinating Minister for Economic Affairs, Dradjad Hari Wibowo, said political developments behind recent rupiah fluctuations did not represent conditions comparable to the 1998 Asian financial crisis. He told reporters that politically driven market volatility was usually short-lived unless a major crisis occurred.
The rupiah began trading on November 12 at Rp18,198 per US dollar, down 49 points, or 0.27 per cent, from the previous closing rate of Rp18,149.
Bank Indonesia said expectations of a US interest rate increase had contributed to the currency’s recent weakness alongside domestic factors. These included concerns that global index provider MSCI might downgrade Indonesia’s stock market classification, developments in the domestic economy and greater year-end demand for foreign currencies.
Wibowo said he was confident that local businesses and market participants could absorb the effects of political developments and that markets could recover. He hoped the rupiah would remain under pressure for only a few days, saying earlier periods of political turmoil had followed that pattern.
He also called for investor education to help prevent investment decisions being driven by unverified information, including rumours about politics and markets.
