Indonesia's stock market plunged 5% on Thursday, reaching its lowest level in over five years, while the rupiah currency fell past the 18,000 per dollar threshold. The decline was driven by multiple factors including a narrowing trade surplus, various domestic challenges, and inflation concerns fueled by rising oil prices.

The rupiah dropped 0.5% to a record low of 18,030 against the US dollar. Its depreciation of more than 7.5% so far this year has made it the worst-performing Asian currency, surpassing the Indian rupee.

The Jakarta Composite Index fell to its lowest point since December 2020, with cumulative losses nearing 10% over the past two trading sessions.

"Recent market movements reflect policy adjustments, which have been intensified by a series of weak economic data points," stated a senior economist for ASEAN at OCBC.

"It is now imperative for authorities to provide clear and timely assurances to the private sector regarding the upcoming direction of new policies."

Data released this week showed Indonesia's trade surplus in April shrank to a six-year low, while May's inflation rate approached the upper limit of the central bank's target range. This comes just two weeks after Bank Indonesia unexpectedly raised interest rates by 50 basis points.

Elsewhere in the region, Singapore's stock market retreated by more than 1% from the record closing high it set on Wednesday. South Korea's market fell approximately 1.2%, while Malaysia's market gained 0.6%.

Among Asian currencies, the Malaysian ringgit weakened to 4.014 against the dollar, marking its lowest level in two months.

The South Korean won declined 0.7%, falling to its weakest point since late March, while the Singapore dollar remained largely unchanged.