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Monday, February 16, 1998 Published at 07:30 GMT



Business

Dispute reports weaken rupiah
image: [ The rupiah - down 75% on the dollar since 1997 ]
The rupiah - down 75% on the dollar since 1997

The Indonesian rupiah has fallen sharply against the US dollar after continuing social unrest and reports of a disagreement between President Suharto and the International Monetary Fund.

The latest fall effectively devalued the rupiah a further 25% against the dollar overnight Sunday-Monday after falls of 75% against the dollar since July, 1997.

President Suharto has been accused of trying to peg the rupiah to the US dollar using a fixed rate of exchange.

The IMF's Managing Director, Michel Camdessus, is reported to have warned that an IMF aid package of $43bn to Indonesia could be discontinued if the goverment sets up a currency board to impose a fixed rate system.

Most Asian stock markets closed sharply lower on Monday, with the key index slumping 4.6% in Singapore because of the financial turmoil in Indonesia.

Indonesian shares closed generally lower, but the Jakarta Stock Exchange composite index rose 2% on buying in mining and telecommunication stocks.

The BBC Jakarta correspondent says a visiting delegation of senior Japanese financial officials is expected to encourage President Suharto to abandon the idea.

The Jakarta Composite Stock Index was up 12.469 points, or 2.78%, at the lunch break, after stocks appeared cheap as the rupiah fell.

Indonesian financial instability is reported to have contributed to falls in the main Hong Kong stock index and weakness in the currency markets in Singapore, Malaysia and the Philippines.
 





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