Indonesian Rupiah Falls to Record Low on Central Bank Woes

The Indonesian rupiah fell to its weakest level in history as resurging over the central bank’s autonomy add to persistent fiscal worries.

The rupiah slipped 0.3% to 16,986 per dollar on Tuesday, surpassing a record low April when it fell below levels from the Asian Financial Crisis.

President Prabowo Subianto ’s move on Monday to his nephew for Bank Indonesia deputy governor position has sparked jitters among investors about potential erosion of central bank’s independence. Last year, BI agreed to shoulder part of the debt costs of Prabowo’s priority programs while lawmakers were also considering to the central bank’s law.

That added to the existing about whether Indonesia will adhere to its budget deficit cap, set after the 1997-1998 Asian Financial Crisis. Last year’s shortfall close to the ceiling. A cooling domestic economy may force the central bank to resume easing to support growth, risking further pressure on the rupiah.

Bank Indonesia is set to announce its first policy rate of the year on Wednesday with all analysts in a Bloomberg survey expected a hold.

READ: