Coordinating Economic Affairs Minister Darmin Nasution has called the rupiah's depreciation since Friday 'illogical' and said the currency's decline does not reflect the state of the economy. (Antara Photo/Reno Esnir)

Jakarta. Coordinating Economic Affairs Minister Darmin Nasution has called the rupiah's depreciation since Friday "illogical" and said the currency's decline does not reflect the state of the economy.

Darmin said after meeting President Joko "Jokowi" Widodo in Jakarta on Tuesday (04/09) that the authorities are examining the reasons behind the rupiah's sharp drop in recent days.

"There were things that pushed the depreciation further, that we think makes it illogical. We're looking to find out why beside Argentina's problem," Darmin said after the session attended by other ministers and the central bank governor.

The rupiah hit its weakest in three years on Friday and this week has reached its lowest point in 20 years.

The rupiah was at 14,920 to the dollar on Tuesday, 1.58 percent below the Aug. 30 closing.

The rupiah has lost nearly 9 percent of its value this year, making it the second worst performing emerging Asian currency after the Indian rupee, as investors cut holdings of assets due to fears of contagion from economic woes in Argentina and Turkey.

Darmin told reporters the government had discovered speculative trading of the rupiah and a technical problem with dollar-rupiah quotations.

Question on Quotations

Bank Indonesia and the Financial Services Authority (OJK) had received complaints from fund managers that some commercial banks did not provide dollar-rupiah quotation on Friday so they were not able to trade, Darmin said.

"I don't know what happened... but immediately it was resolved," he said. "My point is there are technical problems that should not have occurred, but they happened."

Separately, Finance Minister Sri Mulyani Indrawati said authorities would closely monitor market players and take firm action against any speculators.

"We will distinguish the genuine economic actors who really work hard to safeguard the economy, safeguard their companies and economic activities... from those who seek profit-taking," said Sri Mulyani, who did not specify what sanctions the government could take against speculators.

Bank Indonesia has raised interest rates by 125 basis points since mid-May and spent billions of dollars in intervention to defend the rupiah.

As part of efforts to support the rupiah, the government has sought to widen use of biodiesel to reduce imports of oil paid for in dollars. An announcement on import tariffs applied to hundreds of consumer goods is due on Wednesday, Sri Mulyani said.

At Tuesday's meeting, Jokowi demanded his cabinet map in detail the import requirements for projects such as power plants, bridges and airports to estimate coming dollar demand, Darmin said.

Reuters