Indonesian rupiah falls to weakest level since 2018

Bloomberg

The Indonesian rupiah dropped to its weakest since the emerging market rout of 2018, as a sell-off in the nation’s bonds and stocks show little signs of abating with a worsening coronavirus pandemic.
The currency slipped as much as 1.5% to 15,160 per dollar on Tuesday, the lowest since November 2018. The benchmark 10-year bond yield surged 17 basis points, while nation’s stock index tumbled over 5%, triggering a trading halt for the third time in a week.
The rout is challenging the fire-fighting ability of policy makers, who have cut reserve ratio, intervened in markets and tightened stock trading rules to slow outflows from one of Asia’s favorite investment destination. That hasn’t stopped foreign funds from selling more than $4 billion of the nation’s debt this year.
The market meltdown in Southeast Asia is worsening by the day as virus spreads through its largest nations. The Philippines became first country to shut its financial markets after its president locked down the capital city.
Indonesia’s central bank is scheduled to meet on March 19, with economists expecting it to cut the policy rate by 25 basis points, according to a Bloomberg survey.
Policy makers from New Zealand to South Korea have already enacted emergency rate cuts to combat the economic and financial fallout from the virus spread.

A rate cut may add to the rupiah’s woes as it’s already the worst performing Asian currency so far this month with over 5% drop.
Bank Indonesia said it bought 4 trillion rupiah ($265.7 million) of government bonds to stabilize markets, twice what it was targeting.
The nation has also seen a jump in local virus cases. The country’s Transport Minister Budi Karya Sumadi also tested positive.
“It has been a perfect storm of realizing that the earlier veneer of insulation from COVID was no more than undetected contagion,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank Ltd. in Singapore.