JAKARTA - The Indonesian rupiah fell below the key psychological level of 18,000-per-US dollar on June 4, putting market watchers on watch for intervention from the country’s central bank.The currency slumped 0.35 per cent to 18,029.5 per US dollar as at 11.06am Singapore time, bringing its decline in 2026 to more than 7 per cent.Against the Singapore dollar, the rupiah also dropped to a new low, trading at 14,047.71 - down 0.32 per cent overnight and making for a 9.3 per cent year-to-date fall.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 June. 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 surplus nearly vanished in April as soaring prices for imported oil and gas outpaced export gains, while inflation accelerated in May.“The rupiah stability is a key mandate for BI,” said Lloyd Chan, forex strategist at MUFG. “Given the trajectory of rupiah depreciation, BI will likely have to raise rates again in June,” he said, projecting a 50-basis-point hike.The central bank has rolled out a series of measures to support the local currency and attract inflows, including issuance of rupiah-denominated bills and tightening requirements for US dollar purchases. Last month, it surprised markets with a 50-basis-point rate hike. Its next policy decision is due June 18.Bank Indonesia r(BI) emains in the markets to stabilise the rupiah and to optimize all policy instruments available to maintain foreign-exchange liquidity and to support financial markets stability, it said in a statement on June 3. The central bank’s intensive interventions have come at a cost, with the nation’s foreign-exchange reserves falling further in April to the lowest in nearly two years. Fitch has warned that a sharp decline in the reserves coverage might lead to a negative rating action.“BI will continue to intervene in the markets although the impact won’t be significant” as Indonesia’s fundamental risks are getting bigger, said Lionel Priyadi, a macro strategist at Mega Capital. “It might hike rates by 50 to 75 basis points as soon as this month.” BLOOMBERGWith additional information from The Straits Times