Rupiah slumps below Rp 11,000 as unrest intensifies

JAKARTA (JP): The rupiah slumped to below Rp 11,000 to the U.S. dollar and share prices continued their plunge yesterday amid the worsening political situation and widespread social unrest in the capital.

Dealers said the currency mustered to Rp 11,200 against the greenback in late afternoon trading on the Jakarta spot market, after plunging to as low as Rp 11,700 in midday trading, compared to Rp 10,600 on Wednesday.

President Soeharto's statement in Egypt during an official visit, answering demands for him to step down, failed to lift the rupiah, one dealer said.

Soeharto reportedly said it would be no problem if people no longer trusted him to lead the country, and that he would not use armed forces to hold on to his position.

Social unrest escalated yesterday as rampaging mobs set fire to buildings and vehicles, and looted goods from stores and malls in Jakarta.

Bankers and brokers left the office early as they feared that the situation in the capital might worsen.

Bank Indonesia ordered all its employees yesterday to go home and suspended yesterday's afternoon clearing due to the riots.

The political tension in the country spiraled following the shooting of four students in an antigovernment demonstration Tuesday.

Analysts speculated the local currency may plunge further to between Rp 15,000 and Rp 16,000 in the near term if the political situation continues to deteriorate.

"The currency's fate is now squarely tied to the political situation," one said.

Further weakness in the rupiah and the new rioting in the capital city sent shares on the Jakarta Stock Exchange tumbling, brokers said.

Although the Jakarta Stock Exchange composite index inched 0.4 percent higher to 403.69, a total of 96 shares weakened, against 22 gainers and 33 unchanged.

Total volume was 269.89 million shares valued at Rp 306.77 billion (US$27.39 million).

The overall index edged higher on extremely thin trade with selective buying on discounted blue-chip counters, brokers said.

"I think there had been a technical rebound, after the market was badly hit in the previous day," said Adriansyah Chaniago, an analyst at PT Bahana Securities.

Indonesia's problems hogged center stage in Asian currency markets yesterday as worsening riots in Jakarta cast a shadow over the region, Reuters reported.

Dealers said activity had slowed to a trickle in Asian currencies, with many major banks in Singapore stopping trade in the rupiah as their counterparts in Jakarta headed home to safety.

Banque Paribas strategist Chin Loo Thio said the relative stability in Asian currency spot rates masked a sharp rise in swap yields.

Elsewhere, the Indian rupee skidded through a series of record lows, with some deals down at 40.77 to the dollar, as companies scrambled for dollars on fears foreign inflows would dry up after the United States and Japan slapped economic sanctions on India.

The Philippine peso was soft and Manila shares ended at their lowest in over two weeks due to worries about the region and slow vote counting for Monday's presidential election.

Across the border, the Malaysian ringgit firmed in the face of corporate dollar offers above the 3.90 level, but dealers said it was likely to slide again once local companies had fulfilled their requirements.

The Thai baht gained from offshore demand to service forward obligations contracted earlier with the central bank.

In North Asia, the South Korean won shed its early gains as the yen succumbed to worries about Indonesia.

The Taiwan dollar also slipped with the yen but steered clear of Wednesday's lows of T$33.437. (rei)