Indonesia’s rupiah touches lowest level since 1998 crisis hinh anh 1Indonesia’s rupiah touches lowest level since 1998 crisis. (Photo:

Jakarta (VNA) – Indonesia’s rupiah (IDR) on March 18 touched the lowest level since the 1998 crisis as fears of a global recession over the rapid spread of the novel coronavirus disease (COVID-19) prompts investors worldwide to dump financial assets.

The currency depreciated around 0.3 percent to 15,222 IDR per USD as of 12:52 pm (local time), Bloomberg data shows.

The last time it touched the level and reached 16,650 IDR was in June 1998 after widespread rioting that led to the downfall of President Soeharto, who ruled Indonesia for 32 years.

The rupiah is now Asia’s worst-performing currency after depreciating around 10 percent so far this year from 13,635 IDR per USD on January 24, a time when the rupiah was Asia’s best-performing currency.

Investors are fleeing out of the emerging market into safe haven assets because they see the probability of a global recession has heightened, according to Bank Permata economist Josua Pardede.

Foreign investors have dumped more than 4 billion USD from rupiah bonds this year, on course for the biggest quarterly outflow ever, and have dumped about 600 million USD worth of shares, Bloomberg reported.

The benchmark Jakarta Composite Index (JCI), the main gauge of the Indonesia Stock Exchange (IDX), has lost 31.25 percent of its value so far this year, suffering three trading halts within a week as the index dropped 5 percent, triggering a circuit breaker.

Josua said the rupiah’s depreciation was also influenced by the fact that the government had yet to allot a significant amount of funding from the state budget to tackle the virus, though it has allocated 120 trillion IDR (7.7 billion USD) to stimulate the economy and cushion economic shocks from the COVID-19 pandemic.

As of March 18, the coronavirus infected at least 227 people in Indonesia and killed 19.

As the situation has yet to show signs of improvement, Josua said Bank Indonesia (BI) should maintain close contact with foreign investors to give them assurances and at the same time, continue its market intervention in the bond market.

The BI cut its policy rate and announced five measures to stabilise the rupiah, including buying government bonds in the secondary market and cutting the reserve requirement ratio for banks’ dollar funds./.