The financial markets in Indonesia rallied after President Suharto made his first official appearance since being taken ill two weeks ago. Both the stock market and the Indonesian currency, the rupea - which had fallen to record low levels - rose sharply after the President was seen leading a graduation ceremony at a military academy. But financial analysts say question marks over President Suharto's health and the absence of a clear successor will continue to block a full recovery of confidence in the Indonesian economy. Our Jakarta correspondent Jonathan Head reports.

President Suharto's attendance at the military ceremony was an important test of the government's assertion that he has made a full recovery. Over the past two weeks his disappearance from public view led to rumours that he had suffered a stroke - which resulted in the Indonesian currency plunging to just 40% of its value against the dollar at the beginning of the year. During the ceremony the President looked calm and relaxed and that seems to have been enough to bring some cheer back to the financial markets.

During the ceremony the President looked calm and relaxed

But this latest health scare has forced investors to consider the prospect of an Indonesia without the man who has ruled it for the past three decades, and it has clearly worried them. President Suharto has never groomed a successor and the issue of who, or even what political system might replace him is almost never discussed.

Indonesia has only known one change of ruler in half a century. That transition, which brought Mr Suharto to power back in 1965, resulted in the deaths of 500,000 people.

Even if he is able to take on the full burdens of office again, many people doubt whether the 76-year-old President is strong enough for another five-year term of office when his current term expires in March. The collapse of the currency has left much of the business community here teetering on the brink of bankruptcy.

Bringing the economy back off its knees will be a formidable challenge for whoever leads Indonesia into the 21st Century.
 

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