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Technology Stocks : INDONESIA'S PT TELECOM(TLK) -- Ignore unavailable to you. Want to Upgrade?

To: Duke who wrote (103)	1/22/1998 8:14:00 PM
From: Duke	Read Replies (1) \| Respond to of 947

Thursday January 22, 3:24 am Eastern Time As rupiah melts, markets demand action not words SINGAPORE, Jan 22 (Reuters) - Another dramatic plunge in the value of the rupiah on Thursday reflected the lack of more substantial measures by Indonesian authorities after last week's new agreement with the IMF, traders and analysts said. The rupiah came under severe pressure on Thursday, falling 20 percent within an hour of the Asian opening to 15,000 per dollar. Trading remained extremely erratic, with bids from brokers at levels of 16,500 and 17,000. In Jakarta there were reports that banks have cut their interbank lines because they do not want to trade in the current market conditions. Compared with its level at the turn of the year, the rupiah has lost 60 percent of its value, and compared with a rate of around 2,400 in July last year when the Asian crisis first took hold, it has dropped about 80 percent. Initially, after last Thursday's revamped agreement on the International Monetary Fund's $43 billion-rescue package, Asian markets took heart and began to cautiously believe that the worst was indeed over. Stock markets and currencies all started to move higher immediately after the news. However, the lack of speedy action by the Indonesian authorities has pole-axed the rupiah, with regional markets following suit as the new-born spark of bullishness died. ''The delay of further action to reform has seen the market lose confidence in the government's ability to carry out the IMF's programme,'' said Benjamin Tse, fixed income economist at ING-Barings in Hong Kong. ''Credibility has got so low and at the same time the corporate banking sector health has deteriorated to the extent that we are probably quite close to complete meltdown in the entire corporate and banking sector in Indonesia.'' The banking sector is the market's main immediate worry and analysts say the Indonesian government's lack of willingness to spearhead any deals with lending banks, unlike Korea, is having a huge impact on sentiment. On top of this there is the question of President Suharto's successor and the suggestion that Research and Technology Minister Jusuf Habibie will be made vice-president. Analysts noted comments from both Suharto and Habibie that have suggested they think fiscal stimulus is needed and that the IMF was wrong to cut funding for the aircraft industry. ''It's what we feared isn't it?'' said Kanika Singh, regional economist at I.D.E.A in Singapore. ''That Indonesia will make all the right statements at the right time, but are not going to follow through. We are seeing a clear lack of market confidence in the Indonesian policy making structure.'' So what needs to be done? First, analysts would like to see Suharto announce a successor and explain the rationale behind it. Secondly, they would like a much more detailed explanation of economic policy. Third, the market would like to see some clear move made on debt restructuring, most importantly the private sector. Fourth, Indonesian authorities need to explain clearly how they are going keep up the pace of the IMF reforms. ''Indonesia has to realise that they have to take the lead, like Korea, and guarantee some amount of private sector debt,'' Singh said. ''Only then will roll-overs happen.'' ''The rupiah will remain under pressure until we get some concrete government action on debt roll-overs...nationalisation of debt is an option Indonesia has to look at if it wants to take the pressure off its currency.'' Asia Forex Desk +65-870-3840