The Standard & Poor (S&P) Global Ratings agency has warned the government about allowing the rupiah to weaken further.

While the rupiah is now hovering around Rp 13,700 against the United States dollar, it is important to prevent it from heading to the point where it becomes psychologically threatening for investors, said S&P lead analyst for Indonesia and Malaysia Xavier Jean in Jakarta on Tuesday.

He stressed that the rupiah's depreciation toward Rp 15,000 per US dollar was the level to watch. “Investors feel that Rp 15,000 is the psychological level beyond which they cannot continue operating,” he added.

S&P regional economist Vincent Conti, meanwhile, emphasized the importance of the government to introduce policies that could tackle the rupiah's depreciation, although it would not be surprising because of the Federal Reserve’s plan to increase the fund rate.

“Even if the rupiah is depreciating, we think that compared to its regional peers, it’s still stable and that shows investor confidence,” said Conti. (bbn)