Dimming prospects

16 December 2014 By Andy Mukherjee

The rupiah has slumped to a 16-year low as capital flees. Outflows could accelerate if falling Indonesian coal prices start mirroring the collapse in oil. A weakening rupiah could hurt foreign-currency borrowers and stoke inflation. That doesn’t augur well for growth in 2015.

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The Indonesian rupiah tumbled to 12,695 to the U.S. dollar on Dec. 15, its lowest level since August 1998, on Dec. 15. It later recovered slightly to 12,665 per dollar, a fall of 1.7 percent over the course of the day. Bank Indonesia said that it was acting in both the foreign exchange and bond markets to help stabilise prices.

Indonesia’s ministry of energy and mineral resources cut the coal benchmark price for December to $64.65 per metric tonne, the lowest since June 2009, according to a Dec. 15 report in coalspot.com. The benchmark has fallen 21 percent this year, and is almost half the February 2011 high of $127.05.

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