A holiday destination…and home to Asia’s worst-hit currency

Looking for a cheap holiday destination? Consider Indonesia, whose currency has slipped against most major currencies this year. You could head to Bali, for instance, where the Indonesian rupiah’s fall against the dollar is certain to give you more bang for your buck.

Currently, the rupiah is Asia’s worst performing currency, having slumped 16% against the greenback.

One of the key reasons for the rupiah’s weak performance has been its large current account deficit, which has given rise to concerns that when the Federal Reserve embarks on its ‘tapering” programme, the country could face an outflow of foreign investor money, weakening the currency further. Big spending plans by the government as it heads into an election year have also hurt the currency’s value.

Nevertheless, for the week ending October 25, the rupiah managed to claw back some gains and put up one of its best weekly performances in recent years, gaining 2.1% to 10,910 per dollar, according to a Reuters report.

In a bid to battle inflation and prop up the currency, the central bank, Bank Indonesia (BI), has raised the benchmark reference rate by 150 basis points (100 basis points equal one percentage point) between June and September.

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