Indonesia will intervene strongly as Rupiah falls to a minimum of five years

The Central Bank of Indonesia promised to intervene strongly in the markets on Friday (February 28) after the rupee submerged at its lowest level in almost five years.

“We will boldly enter the market to maintain the balance of the supply and demand for foreign exchange to maintain market confidence,” said Edi Suianto, executive director of the monetary management of Bank Indonesia (BI), in a text message. The authorities also intervened on Thursday.

The rupee fell 0.7 percent to 16,568 on Friday, weaker since April 2020, since US tariffs in Canada and Mexico will enter into force next week. Asian currencies face multiple winds against, including the growing pressure of commercial policies and the uncertainty of the president of the United States, Donald Trump, about the Federal Reserve flexification cycle.

The rupee “seems to continue operating with one more tone of risk,” said Alan Lau, Malayan Banking strategist in Singapore. “The situation, although it still looks fluid, since it is uncertain if tariff threats could represent a mere brinkmanship or if it would materialize.”

The Rupiah has been under pressure this year after Bi reduced its reference interest rate in January in an unexpected movement. The currency has fallen almost 3 percent this year in the worst performance among the main Asian emerging pairs. Bloomberg