JAKARTA - The Indonesian rupiah is closing in on a key psychological level, putting market watchers on watch for a stronger response from the central bank.

The local currency is less than 0.3 per cent away from hitting the 18,000-per-US dollar level after touching a new low on June 3. BNP Paribas, MUFG Bank and PT Mega Capital Sekuritas expect Bank Indonesia to step up market intervention measures, while further raising interest rates as soon as this month. 

Indonesian authorities have defended round numbers in the past and “18,000 is likely a psychological level market participants will be watching closely,” said Parisha Saimbi, a strategist at BNP Paribas. “Bank Indonesia intervention efforts appear likely to try to stem the pace of currency depreciation.”

The rupiah is Asia’s worst-performing currency in 2026, pressured in part by concerns that elevated oil prices will widen Indonesia’s budget deficit through higher energy subsidy costs. A break beyond 18,000 could accelerate foreign outflows from local stocks and bonds, making the level a key test for policymakers seeking to restore confidence in an economy facing mounting headwinds.

Investor sentiment toward Indonesian assets deteriorated in 2026 after MSCI warned the country could be reclassified as a frontier market, while Fitch Ratings and Moody’s Ratings revised their outlooks on the sovereign. Concerns have also grown over government efforts to exert greater control over key commodity exports. 

The nation’s stocks benchmark dropped to a five-year low on June 3 amid the rupiah’s slide and concerns about a potential sovereign rating downgrade. Indonesia’s trade sur...