Analysis: Indonesia's defences start crumbling against relentless dollar
17/10/2022 (Reuters), Singapore - Indonesia's currency is tumbling and foreign money in its bond markets is heading for the exits, stoking fears that Southeast Asia's largest economy is finally starting to crack after months of remarkable resilience against global headwinds.
Despite its history of merciless market drubbings during times of global economic stress, Indonesia was a surprising outperformer until August, buoyed in large part by its exports of gas, palm oil, and other prized commodities.
Its stock market (.JKSE) is Asia's best performer this year and the rupiah fell just 3% in the six months to end-August against a forceful U.S. dollar, while South Korea's won and the Thai baht both dropped more than 10%.
But September brought a turn for the worse as the rupiah slid 2.5%, its largest monthly fall this year and more in line with its Asian peers, leading analysts and investors to raise alarm bells over old, familiar risks: dwindling currency reserves, rising debt obligations and foreign capital flight.