Further depreciation of rupiah may force banks and insurance companies go bankrupt, a private banking watch organization warns.

The Center of Banking Crisis (CBC) said on Tuesday that the country'€™s financial sector would be hit hard should the rupiah exceed the Rp 16,000-mark against the US dollar.

Such a conclusion was made by CBC after conducting a series of simulation tests.

Based on the tests, CBC expects that if the rupiah weakened to Rp 15,000 per dollar, then one insurance company would go bankrupt as the Jakarta Composite Index was expected to lose 20 percent of its value.

'€œI apologize but I can'€™t give the name [of the insurance company],'€ CBC president director Achmad Deni Daruri said, as quoted by tribunnews.com on Tuesday.

The worst, however, is not over. CBC'€™s tests also predicted that if the rupiah depreciated further to the level of Rp 16,000 per US dollar then three state-owned banks, which own shares in the insurance company, would be at risk of bankruptcy.

However, Deni is still hopeful that the bleak future could be avoided with the government giving a clear and firm policy to stop the rupiah from depreciating further. (rad/ika)

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