JAKARTA, February 12: Indonesian stocks plunged more than nine per cent on Thursday on worries and confusion over the government's plans to fix the rupiah currency's exchange rate, brokers said.A riot in a West Java town and signs that Research and Technology Minister Jusuf Habibie may be the favoured candidate for President Suharto's running mate in March presidential elections also spooked investors, they said. The composite index closed down 9.29 percent at 442.29points.
The rupiah was little unchanged at 7,600/7,800 in late trade but dealers said there was much underlying concern on reservations over the fixed-rate regime and the Habibie factor. Habibie is considered a financial maverick by the markets and the rupiah plunged to a historic low of 17,000 to the dollar last month when hints first surfaced that he could be named vice-president and the 76-year-old Suharto's potential successor. The rupiah has appreciated from a level of about 9,500 last week on market talk that the government will adopt acurrency board system and fix the local currency at around 5,500 to the dollar, covering it with central bank reserves.
But dealers said players were starting to take profit ahead of the move. One said the rupiah had another 1,000 to 1,500 points to appreciate if the fixed-rate system was implemented, but it had an unlimited downside if the system failed.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
