Rupiah falls below 18,000 per dollar, stock index hits low

The Indonesian rupiah plunged to a record low against the US dollar on Thursday, breaching the key psychological threshold of 18,000 per dollar for the first time. The currency's sharp decline was part of a broader market selloff that also saw the country's benchmark stock index hit its lowest point in nearly six years.

The rupiah weakened to as low as 18,074 per dollar during Asian trading, extending its losses for the year to more than 7 percent and cementing its status as Asia's worst-performing currency. The simultaneous drop in stocks and bonds underscored mounting investor anxiety over Indonesia's economic outlook.

Analysts point to a confluence of domestic and international pressures driving the selloff. Surging global oil prices, attributed to geopolitical tensions in the Middle East, have strained Indonesia's trade balance. As a net oil importer, the country faces higher import costs, which have dramatically narrowed its trade surplus. Official data shows the surplus shrank to $89 million in April from $3.3 billion in March, reducing the supply of US dollars in the local market.

Domestically, investors are growing wary of fiscal policy under President Prabowo Subianto's...