The Indonesian currency and stock market went into virtual freefall yesterday as doubts about the political prospects for President Suharto added to fears about the state of the country's finances.
As the crisis deepened, Indonesians stocked up on staple foods amid rumours of shortages and fear of riots. Meanwhile last night a senior Japanese official said Japan and the US were in broad agreement on the need for co-operation to shore up the battered yen, which has also been hit by the turmoil. Japanese Economic Planning Minister, Mr Koji Omi said after talks with US deputy treasury secretary and Federal Reserve Board chairman, Mr Alan Greenspan that they had not discussed concerted intervention on the markets, but they had agreed to co-operate. He did not regard the yen's current level as appropriate, he said. Then yen has fallen to 133.27 to the dollar, its lowest level in five years. In Indonesia, talk that Mr Suharto would announce that he was not seeking re-election in March added to the air of crisis yesterday, but the president made no formal statement.
The rupiah fell sharply from 8,400 to the dollar to more than 10,000, with traders reporting virtually no buyers.
The Jakarta stock market dropped 19 per cent at one stage yesterday and even a late recovery left it 12 per cent down on the day. Indonesia's currency has now fallen by more than 70 per cent against the US dollar since July last year, when the south-east Asian economic turmoil began.
Indonesia's problems set the tone for another dismal day for the region's currencies and stock markets. The Singapore dollar fell yesterday to 1.808/$, its lowest level since 1990, while the city state's stock market shed more than 7 per cent.
Fears of an imminent hike in interest rates and regional currency upheaval pushed Hong Kong shares down again yesterday, with the benchmark Hang Seng index plunging below 9,000, before recovering to close with a loss of just under 3 per cent.
With the market braced for a speculative attack on Hong Kong's currency, which is pegged to the US dollar, interbank rates jumped sharply.
