Rupiah faces bleak outlook again this week<\/p>\n
By Bernie K. Moestafa<\/p>\n
JAKARTA (JP): The rupiah faces a bleak outlook again this week
\nas anticipation of a political showdown between President
\nAbdurrahman Wahid and his opponents at the end of this month is
\nexpected to further spur dollar buying, analysts predict.<\/p>\n
They said the rupiah could breach the 12,000 level against the
\nU.S dollar.<\/p>\n
"In anticipation of political problems, people buy dollars
\nahead of time," said president of Vickers Ballas Tamara, David
\nChang, over the weekend.<\/p>\n
He said that with political tension escalating fast,
\nspeculators and panic buying would rule the market.<\/p>\n
A House of Representative plenary session on April 30 will
\ndecide whether to issue a second memorandum of censure against
\nthe President, which could bring him closer to impeachment.<\/p>\n
Abdurrahman has lambasted such a move as unconstitutional and
\nhas insisted on serving his full term until 2004.<\/p>\n
Fears that supporters of both sides will pick up the fight
\nfrom the political elite have increased in the past few weeks.
\nThousands of the President's supporters have pledged their lives
\nfor him, in what they believe would be a jihad against his
\nenemies.<\/p>\n
On April 29, supporters of the President will flood Jakarta to
\njoin a mass prayer organized by Abdurrahman's Nahdatul Ulama
\norganization.<\/p>\n
In response, organizations of various backgrounds have
\nthreatened to mobilize their members against President
\nAbdurrahman's supporters should they enter Jakarta.<\/p>\n
Chang said fears that the capital could descend into anarchy
\nran high. This, he said, would keep fueling the rupiah's descent.<\/p>\n
He said that only a compromise -- the President surrendering
\nhis power -- could defuse the tension. "I don't think any leader
\nin this world would want to be responsible for leading his
\ncountry toward destruction," he said.<\/p>\n
Chang warned that the rupiah could enter a free fall again,
\nlike it did during the peak of the economic crisis in 1998.<\/p>\n
Faltering support from international lenders can no longer
\ncushion the impact of the rupiah's fall, he added.<\/p>\n
With no political solution in sight, he said, the financial
\nmarket might see another crash similar to that in 1998. "Back
\nthen the rupiah's fall surprised us; this time we know what's
\ncoming," he said.<\/p>\n
President Abdurrahman on Thursday warned of a national
\nrebellion if legislators proceeded with a second censure of him.<\/p>\n
The rupiah took the warning badly, breaching the important
\nbarrier of 11,000 against the greenback.<\/p>\n
But Friday trading brought the rupiah close to the 12,000
\nlevel, ending at 11,925 to the dollar, down from the previous
\nweek's close at 10,580.<\/p>\n
Currency analyst Farial Anwar said a thin dollar supply amid
\nsoaring demand for the unit caused Friday's volatile trading.
\n"Whatever price you ask for the dollar, they (the market) will
\nbuy it," he explained.<\/p>\n
The market also realizes that Bank Indonesia has only limited
\nresources to intervene, he said. He added that concerted efforts
\nbetween state companies and the central bank to shore up the
\nrupiah had failed.<\/p>\n
Farial shared David's view that the rupiah was close to
\nrepeating its 1998 free fall, as it was already highly volatile.<\/p>\n
He said that expectations of the International Monetary Fund
\n(IMF) soon disbursing its long delayed US$400 million tranche had
\nrun aground.<\/p>\n
"It's much clearer now that the IMF wants to delay the third
\ntranche as long as possible and other international lenders will
\ndo the same," he said.<\/p>\n
As a result of the worsening political climate, Farial added,
\nalmost all macroeconomic indicators are suffering, adding yet
\nmore pressure on the rupiah.<\/p>\n
Farial said that demand for the dollar was so high that even
\nstock investors were buying the foreign unit. This, he said,
\nbrought down the local stock market index.<\/p>\n
Stock market analyst Zulfiqar at Mandiri Sekuritas said that
\ndomestic pressure on the stock market had outweighed positive
\ndevelopment outside.<\/p>\n
"Gains in regional stock markets, the Fed's (U.S. Federal
\nReserves) interest cuts, none of that has helped ours," he said.<\/p>\n
The Jakarta Stock Exchange (JSX) Composite Index recorded
\nsharp falls for almost the entire last week, to end at 342.85
\nfrom 365.98 in the week before.<\/p>\n
Zulfiqar said he expected continued selling pressure across
\nthe board, with a possible rebound to occur among only blue
\nchips.<\/p>\n
According to him, the JSX index might further drop to breach
\nthe 340 level in trading this week. (bkm)<\/p>",
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