BUSINESS – As October commenced, several Asian currencies faced sharp depreciation against the US dollar, with the Indonesian rupiah, South Korean won, and Malaysian ringgit among the hardest hit. Data from Refinitiv as of 09:15 WIB indicated that the won experienced the most severe downturn, followed by notable losses in the rupiah and ringgit.
The broad weakness reflects a confluence of external pressures. The US dollar has maintained strength amid expectations of continued monetary hawkishness from the Federal Reserve, making dollar-denominated assets more attractive. At the same time, elevated global risk sentiment and geopolitical uncertainty are creating capital outflows from emerging markets, further undermining local currencies.
In Indonesia, the rupiah’s slide is partly fueled by concerns around fiscal sustainability and investor confidence. The country’s expansive public spending plans—especially for programs like free meals and social assistance—have drawn scrutiny over their long-term budget impact. Markets appear sensitive to any signs of slippage in government revenue versus expenditure.
The South Korean won also tumbled substantially, exacerbated by tightening global liquidity conditions and sluggish export momentum. As South Korea is heavily integrated into global trade, its currency is especially vulnerable to shifts in global demand and investor risk appetite.
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Similarly, Malaysia’s ringgit weakened under the weight of lower commodity prices and capital outflows. The ringgit’s performance has historically corresponded with fluctuations in energy and palm oil markets, and recent declines in these sectors have further pressured the currency.
Analysts suggest that these currency pressures are unlikely to reverse quickly unless central banks in the region take proactive measures, or external conditions ease. Some of the tools under consideration include interest rate hikes, foreign exchange intervention, or tighter fiscal controls to shore up confidence.
Investors in the region are also watching closely the developments in the US: upcoming inflation data, central bank statements, and global trade policies could all sway the momentum. Should the dollar continue to rally, emerging market currencies may remain under sustained pressure.
For now, Asian economies entering October confront a tense environment: weakening currencies that raise import costs, add pressure on inflation, and stress external debt repayments. Policymakers may need to balance defending their currencies with preserving growth and fiscal viability.
