Indonesia Currency Dives, Surpasses 15,000 to Dollar
Indonesia’s currency plummeted anew early today, threatening to reach near-worthless status against the U.S. dollar, as investors continued to register their disapproval of Indonesian President Suharto’s reelection plans.
The rupiah’s fresh dive unnerved traders across Asia, sending most of the region’s stock markets down sharply again.
After sliding to a new low of 11,550 to the dollar on Wednesday, the rupiah went into a breathtaking plunge early today, falling through the 15,000 level.
Dealers said the currency clawed back some ground after Bank Indonesia intervened repeatedly, selling dollars for rupiah at the 14,000 and 13,500 levels.
Despite the International Monetary Fund’s planned $43-billion bailout of Indonesia’s debt-ridden economy, sentiment toward the rupiah remains overwhelmingly negative, traders said, in large part because Suharto is viewed as unfit to continue to lead the country.
Other Asian currencies fell with the rupiah today, including the Thai baht and Malaysian ringgit. The currencies’ losses dragged stocks lower as well.
The main Indonesian share index was off 5.9% near midday, while Malaysia’s main index fell 3.9% and South Korea’s lost 2.8%.
Hong Kong’s main stock index was down 4.5% at midday today after falling 2% on Wednesday.
The Hong Kong market also was rocked by worries about the local economy, following the liquidation of CA Pacific Securities.
The firm’s failure sent hundreds of Hong Kong residents, some in tears, flocking to their brokerages to close their accounts out of fear of more losses.
“Crisis of Confidence” read the front-page headline of the influential South China Morning Post.
Thousands of people have lost their jobs in Hong Kong in the last few months as investment banks, brokerages, airlines and department stores, among other businesses, reel from the East Asian economic turmoil.
Hong Kong retailers are demanding 40% off their rents, saying that discount is necessary to keep them afloat in the wake of the plunge in retail sales.
A new poll this week shows that 62% of Hong Kong residents felt that life had grown worse since China’s takeover of the former British colony on July 1.
