(Bloomberg) -- The Indonesian rupiah dropped past the key psychological level of 16,000 per dollar, escalating pressure on the central bank to ramp up its defense of the currency.
The rupiah fell as much as 0.5% to 16,002 per dollar on Friday, weighed by the resurgent greenback amid a robust US economy and rising geopolitical tensions. Bank Indonesia, which said earlier in the day that it was carrying out a “quite bold” market intervention, had said the currency’s fundamental level is stronger than 16,000 per dollar.
“The rupiah might have some more space to go, before BI feels the need to come down strong,” said Mingze Wu, currency trader at StoneX Financial Pte Ltd in Singapore. “If the Fed is more dovish than expected, BI might not even need to do anything — let the Fed do the job for them.”
The rupiah has slumped more than 5% this quarter as the dollar and Treasury yields climbed on fear that Donald Trump’s protectionist trade policies will lift US inflation and temper interest-rate cuts next year. A Bank Indonesia rate reduction is expected to come as early as next week could add more pressure to the rupiah.
Investors pulled about $1.8 billion from Indonesia’s stock market this quarter.
--With assistance from Matthew Burgess.
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