(Bloomberg) -- Indonesia’s rupiah slid the most since November 2016 as trading resumed after the Eid al-Fitr holidays, with local markets playing catch up to recent emerging-market losses triggered by rising trade frictions between the U.S. and China.

The currency fell as much as 1.2 percent to 14,095 per dollar from its close on June 8. The benchmark Jakarta Composite Index dropped 0.2 percent. The gauge slipped 1.8 percent on Wednesday, the first day of trading in equities after celebrating the end of the holy month of daytime fasting.

The rupiah is among Asia’s worst-performing currencies this year, despite getting some reprieve after the nation’s central bank raised interest rates twice in a span of less than two weeks to help stabilize the exchange rate. The recent escalation in trade tensions between the world’s two largest economies threatens to worsen an emerging-market selloff sparked by rising U.S. rates and a stronger dollar.

“Bank Indonesia’s aggressive policy response helped the rupiah recover, but it remains vulnerable,” Brown Brothers Harriman & Co. strategists including Marc Chandler and Win Thin wrote in a note earlier this week.

Thursday’s decline has taken the rupiah’s losses in 2018 to 3.7 percent. The currency sank to 14,213 last month, the weakest since October 2015.

More Hikes

Bank Indonesia Governor Perry Warjiyo has said the central bank may raise interest rates at its policy meeting next week to defend the currency. “BI is ready to implement further policies to be pre-emptive, front-loading and ahead of the curve toward the new development of the Fed’s and ECB’s policy course,” Warjiyo said in a response to questions via text message on Monday.

The rupiah’s slide Thursday compares with a 2.8 percent slump in South Korea’s won and a 2.5 percent drop in Thailand’s baht since June 8 - the last day of trading in the Indonesian currency before the holidays. The Bloomberg JPMorgan Asia Dollar Index has weakened 1.3 percent in the period.

Warjiyo’s comments “sound hawkish and, in our view, BI is likely preparing the market for another rate hike, as it always does,” Credit Agricole CIB strategists including Sebastien Barbe wrote in a June 20 report.

To contact the reporter on this story: Ruth Carson in Sydney at rliew6@bloomberg.net

To contact the editors responsible for this story: Tan Hwee Ann at hatan@bloomberg.net, Shikhar Balwani, Nicholas Reynolds

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