USD/IDR: Indonesian Rupiah drops to lowest since June 1998

• Indonesia's Rupiah slips to a 22-year low a day after the central bank delivered a rate cut. 
• Options market data shows a record demand for USD/IDR calls. 

Indonesian Rupiah fell to 15,900 per US dollar early Friday to hit the lowest level since June 1998. 

Bank Indonesia, the country's central bank, reduced interest rates for the second time this year on Thursday to help the economy counter the coronavirus-led slowdown and maintaining stability in the financial market amid a massive capital outflow. 

The central bank slashed its 7-day reverse repo rate by 25 basis points to 4.5%. The rate cut, however, has ended up bolstering bearish pressures around the IDR, as indicated by the slide to 22-year lows. 

At press time, the IDR is trading at 15,700 per US dollar, representing a 3.22% drop on the day. Meanwhile, the country's 10-year bond yield has risen to 8.061% to hit the highest level since May 2019 versus. 

Risk reversals at record highs

One-month risk reversals on USD/IDR, a gauge of calls to puts, has risen to a record high of 13.22. The positive number indicates the demand for calls (bullish bets) is higher than for puts (bearish bets). 

Risk reversals, therefore, indicate the call bias is strongest on record. 

Technical levels