JAKARTA -- The Indonesian rupiah fell to its lowest mark against the U.S. dollar in 20 years as investors grow increasingly weary of holding emerging market assets after another plunge in the Argentine peso.
The currency hit 14,840 rupiah to the greenback on midnight Friday, its lowest against the dollar since July 1998 following the Asian financial crisis.
The central bank has intervened to prop up the currency. "Bank Indonesia's commitment to maintain economic stability is very strong, especially the stability of the rupiah exchange rate," said Perry Warjiyo, governor of Bank Indonesia, the country's central bank. "Therefore, we intensify or we increase ... the volume of intervention in the forex market."
The latest sell-off was prompted by the plunge in the Argentine peso on Thursday, which fell to a record low against the dollar even as the country's central bank raised its key interest rate by 1500 basis points to 60%. The move stoked fresh fears of emerging market assets among international investors.
The Indonesian currency had been falling since the start of the year amid concerns over heightening trade tensions between the U.S. and China, as well as the financial crisis engulfing Turkey.
Friday's fall means the rupiah has dropped as much as 8.7% since the start of the year, despite Bank Indonesia raising its interest rate by a total of 125 basis points since May and burning through foreign currency reserves, which stood at $111.9 billion in July, down 10.5% compared to the end of January.
The governor stressed that the country's economic condition "is strong and resistant," and that the bank will "continue to be aware of what is happening in other countries," including Turkey and Argentina.
Indonesia, which was one of the so-called Fragile 5 countries during the Taper Tantrum in 2013, is prone to large sell-offs in times of market stress due to economic fundamentals. The nation's current-account deficit widened to $8 billion in the second quarter of this year -- the most in nearly four years -- and its trade deficit clocked in at a five-year high of $2 billion in July.
Indonesian President Joko Widodo, who is eyeing a second term, is keen to keep the rupiah under control as a falling currency may translate into higher living costs, which could cost him April's presidential election next year.
Jakarta has sought to improve its trade position by introducing an array of policies. President Widodo has said publicly that he wants to boost tourism to bring in more foreign cash, while ordering increased use of locally produced palm-oil biodiesel fuels to wean the country away from imported fuels.
The government is also aiming to raise import tariffs on 900 consumer items to slow imports.