Rupiah slumps below Rp 11,000 as unrest intensifies

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)