High demand for dollars sends rupiah to new low
High demand for dollars sends rupiah to new low
JAKARTA (JP): The high demand for U.S. dollars from local
companies dragged the rupiah down further yesterday to a new low
of 10,500 against the greenback in morning trade, dealers said.
Dealers said the rupiah managed to recover in the afternoon on
news that the German government would help Indonesia settle
offshore loans in the private sector.
The spot rupiah recovered to close at 9,650/9,975 in Jakarta
against an opening of 10,100/10,200.
Horst Kohler, a special envoy of Germany's Chancellor Helmut
Kohl, said here yesterday he would propose to Kohl to ask German
banks to contribute constructively to a solution to the foreign
debt problem of the Indonesian private sector.
Kohler, who is leading a special German delegation here to
assess Indonesia's economic situation, said finding a rapid
solution to Indonesia's private offshore debt was of crucial
importance in dealing with the economic crisis.
Foreign and local analysts have also said the recovery of the
rupiah would depend largely on the handling of the country's huge
private debt.
"Without such a solution, the Indonesian currency will decline
further," Kohler said.
According to a government estimate, the offshore debt of the
Indonesian private sector was US$65 billion as of September last
year. Most of the loans were short-term debts with a maturity of
between one and two years.
"News on further banking mergers is good, but since there is
no clear solution to the private sector debt, the rupiah fell
further," a chief dealer with a local private bank said.
Some analysts suggested the debt moratorium could be part of a
solution to the country's mounting external debt.
"With that, Indonesian corporations will have enough time to
restructure their debts," the dealer said.
Analysts said uncertainty about the country's future vice
president also contributed to the rupiah's free fall.
"Investors are waiting for the announcement of the new vice
president," one analyst said. He said President Soeharto's
announcement that he was ready to be reelected was not strong
enough to ensure jittery investors.
"Sporadic riots in small towns in East Java also put more
pressure on the rupiah," a chief dealer with a local private bank
said.
Dealers also attributed the weakened rupiah to Standard &
Poor's report about the poor performance of the country's banking
system.
According to the U.S.-based rating agency, Indonesia needs
about $15 billion in fresh capital to cope with the sharp
deterioration of the local currency.
As the rupiah fell, stock prices on the Jakarta Stock Exchange
(JSX) rose 2.05 percent, supported by a late rally on banking
stocks on expectations of more bank mergers and buoyant trading
in blue-ship stocks, brokers said.
The JSX composite index surged 9.01 points to 448.03 yesterday
from 439.01 the previous day with 498.91 million shares changing
hands worth Rp 537.74 billion ($56.6 million). (aly)
German envoy -- Page 8
Currencies -- Page 9