Rupiah flirts with 11,000 mark amid pessimism in RI economy

Rupiah flirts with 11,000 mark amid pessimism in RI economy

The rupiah plunged early on Tuesday to beyond 11,000 per U.S.
dollar, reaching the lowest level in three months, but managed to
strengthen late in the afternoon amid rumors of Bank Indonesia
intervention and profit taking.

The local currency ended higher at 10,835 compared to 10,940
on Monday.

Dealers said that corporate dollar demand and a slew of bad
news for the economy had caused the rupiah to be under strong
pressure.

Dealers said that the central bank was believed to have sold
around US$20 million to avoid further depreciation in the local
unit.

But the country's bleak economic outlook would continue to
cloud the rupiah, dealers said.

The World Bank criticized the government on Monday for the
lack of progress in implementing key economic reform programs
particularly in the field of privatization and asset sales.

The snags in the planned sale of state-owned cement producer
PT Semen Gresik to Mexican cement giant Cemex SA de CV had also
created concerns among foreign investors.

Late last week international rating agency Standard & Poor's
cut the country's sovereign credit rating from CCC+ to CCC with a
negative outlook.

The rupiah has been weakening since the middle of August amid
growing pessimism toward the administration of President Megawati
Soekarnoputri particularly in the implementation of economic
reform programs.

The rupiah strengthened to around 8,200 when Megawati assumed
power late in July from around 11,000 during the administration
of former president Abdurrahman Wahid. --JP