Indonesia’s rupiah falls to record low against US dollar

Currency plunge comes as energy shock from the Iran war casts a cloud over Southeast Asian economies.Indonesia’s Rupiah has hit its weakest level ever against the US Dollar, breaching the psychological 18,000 threshold amid surging energy costs.The currency hit 18,028 against the greenback on Thursday, despite recent central bank efforts to provide support.Recommended Stories list of 4 itemslist 1 of 4Nigeria’s second-chance schools: women balancing study and survivallist 2 of 4Rubio distances himself from Netanyahu’s Gaza planlist 3 of 4Elon Musk’s SpaceX eyes $1.77tn valuation ahead of blockbuster IPOlist 4 of 4UK far-right accused of exploiting killing of Henry Nowakend of listThe energy shock driven by the US-Israel war on Iran has placed a significant strain on energy-importing Southeast Asian economies, particularly Indonesia and the Philippines.The resulting pressure on trade balances has contributed to capital outflows and weaker currencies.Gulf hostilities flared again on Wednesday, sending oil prices up more than 1 percent.Adding to regional uncertainty, the United States has proposed additional import duties of 10 percent or 12.5 percent on goods from 60 economies, including Indonesia, Malaysia and Singapore, over alleged forced labour failures.Permata Bank chief economist Josua Pardede said that an exchange rate of 18,000 was a “psychological threshold” for market investors.The weakening, he told the AFP news agency, was fuelled by high dollar demand caused by the spike in oil prices and a narrowing trade surplus.Indonesia is a net oil importer and is particularly affected by the rising crude costs, though the government insists it will leave subsidised fuel prices unchanged.The country’s trade surplus has been hammered, narrowing to just $89m in April, from $3.3bn a month before, further reducing dollar supply in the Indonesian market, Josua said.“Dollar supply from goods trade is dwindling, while dollar needs for energy imports, raw materials, dividends, foreign debt payments and seasonality needs remain significant,” he said.