Rupiah Plunges to 17,900 per Dollar as Policy Delays and Export Rules Deepen Panic
Updated
Updated · Asia Times · Jun 4
Rupiah Plunges to 17,900 per Dollar as Policy Delays and Export Rules Deepen Panic
3 articles · Updated · Asia Times · Jun 4
Summary
17,900 rupiah per dollar by end-May marked a record slide driven less by inflation fundamentals than by panic, capital flight and a severe shortage of dollar liquidity in Indonesia’s spot market.
Bank Indonesia’s delayed response worsened the rout: it held rates unchanged for seven months, then lifted its benchmark 50 basis points to 5.25%, but the move failed to restore confidence as stocks and bonds came under pressure.
External accounts reinforced the selloff, with the first-quarter current account deficit widening to $4 billion, the balance of payments posting a $9.1 billion deficit, and higher oil prices and US yields pulling funds from emerging markets.
New export-earnings rules due June 1 added stress by requiring non-oil exporters to keep 100% of proceeds in state banks for 12 months, prompting firms to delay dollar conversions and shift liquidity offshore.
The latest drop follows the rupiah’s breach of 18,000 this week and underscores broader concern that Indonesia needs tighter domestic liquidity, more flexible export-retention rules and clearer policy coordination to stabilize the currency.