Rupiah closing in on 11,000 mark against dollar

Rupiah closing in on 11,000 mark against dollar

The rupiah plunged to near 11,000 per U.S. dollar late on
Monday, the lowest level during President Megawati
Soekarnoputri's three-month-old administration.

Bank Indonesia deputy governor Miranda Goeltom said that the
pressure on the local unit was due to strong dollar demand from
the corporate sector to repay foreign debt.

"Dollar demand for debt repayment is enormous," Miranda told
reporters, pointing out that companies were buying the greenback
for hedging purposes.

The rupiah closed at 10,940, down from 10,675 on Friday.

Miranda said that domestic and external uncertainties would
continue to cloud the rupiah.

The local unit tumbled to around 11,000 before Megawati's
predecessor Abdurrahman Wahid was dismissed by the People's
Consultative Assembly due to incompetence.

The rupiah strengthened to around 8,200 following the election
of Megawati late in July amid hopes of an improving political
climate at home and growing confidence in the economy with the
installment of a credible economics team.

The 2001 state budget assumes an average exchange rate of Rp
9,600 per dollar.

But recently there has been growing criticism that the
Megawati administration has been progressing slowly in the
implementation of key economic reform programs.

On Monday, the World Bank released a report ahead of a key
Consultative Group on Indonesia (CGI) donors meeting this week
criticizing the slow progress in key reform programs, including
privatization and asset-sale programs.

"Official creditors are becoming increasingly wary of pledging
support for policy reform when the track record gives little
comfort," the Bank said.

Earlier, international rating agency Standard & Poor's cut the
country's sovereign credit rating from CCC+ to CCC due to concern
over debt rescheduling at next year's Paris Club meeting. --JP