KUALA LUMPUR: Stocks on the Jakarta Stock Exchange took a beating on Wednesday, while the rupiah tumbled to a 20-year low as investors flee the market amid rising global trade tensions and fears of contagion due to crises in Argentina and Turkey.
The main stock index in Jakarta tumbled 220 points, or 3.8% to 5,683 points. The rupiah was traded at 14,938 against the US dollar.
The ringgit weakened against the US dollar 4.1470 while the Thailand’s baht was quoted at 32.79 against the greenback. Thai Baht hit an all time low of 47 against the US dollar on Dec 31, 1997.
During the crisis, the rupiah hit a low of 16,650 against the US dollar in June 1998. The currency of Southeast Asia’s biggest economy has been on a downtrend in the past few months.
The Philippine peso depreciated to 53.6 against the dollar. It hit a low of 56.2 in September 2004.
However, economists said the rupiah depreciation is not a shock to the system unlike the situation in 1998 whereby the currency depreciated from IDR2,400 to IDR16,000 against the US dollar in the space of once year.
The ringgit is trading on a choppy mode as traders are awaiting for the outcome of today’s meeting of the Monetary Policy Committee (MPC), scheduled to be disclosed at 3pm.
Reuters reported that the Indonesia’s government said authorities will take firm action against currency speculators, and announced plans to delay import-heavy energy projects, as the rupiah hit its weakest levels since the Asian financial crisis in 1998.
Finance Minister Sri Mulyani Indrawati didn’t say what sanctions speculators could face, but warned that large currency transactions would be checked by Bank Indonesia (BI) and the Financial Services Authority (FSA) to ensure they were based on trade or commerce, and not just playing the market.