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To: Rational who wrote (248)	2/4/1998 10:31:00 PM
From: Duke	Respond to of 947

Rupiah rallies 9% but baht selling dampens mood Traders attribute dizzy moves to profit-taking By Larry Wee [SINGAPORE] R egional currencies ran helter-skelter in a very volatile Asian session yesterday, initially rallying strongly as the greenback fell sharply below the 10,000 mark against the Indonesian rupiah, and then falling back as the Thai baht weakened on aggressive European selling. Traders told BT that the Asian session started on a robust note, buoyed by news that Prime Minister Goh Chok Tong had proposed a guarantee scheme to help finance Indonesian imports. The rupiah led the morning rally, and rose strongly through the 10,000 mark to an intra-day high of 8,700, before finishing at 9,650 -- still an impressive 9 per cent gain from Tuesday's 10,600 Asian close. But aggressive European selling of the baht early in the afternoon soured the mood. Players reported that holders of a Thai-issued US dollar bond had exercised an option to redeem it, creating the belief that the issuer would have to convert baht holdings into US dollars to meet the redemptions. Reported profit-taking by offshore speculators on Thai stocks, whose key index has bounced back almost 50 per cent since late last year, also added to the pressure on the baht. The Stock Exchange of Thailand Index ended 9.5 per cent lower yesterday at 505.59. And, after first rising in the morning to as high as 46.50 to the greenback, the Thai baht was forced once again below 50 by the Asian close, ending at 50.25, or 3.6 per cent weaker. The Malaysian ringgit traversed a 24-sen range. It first sliced straight through 4.00 per US dollar to match its Dec 31 close of 3.88, and then swung back to a 4.12 low before it ended at 4.0780, or 0.3 per cent weaker. The Sing ended almost unchanged at 1.6965 after hitting a morning high of 1.6760, and the Korean won lost 1.7 per cent to finish at 1,609. Most players attributed the dizzy moves in Asian trading yesterday to profit-taking after recent regional currency strength, and were not ready to write off the better tone in Asian markets. Daniel Lian, ANZ Investment Bank's Head of Asian Economic Research, is solidly bullish and sees Asian currencies strengthening by at least another 10 per cent against the US dollar. This is despite lingering concerns about negotiations to restructure Indonesian corporate debt, after Indonesia halted corporate debt servicing last Tuesday. "Even if a deal does not come through any time soon, I'm confident that the mood's changed a lot for the better," he said.

To: Rational who wrote (248)	2/4/1998 10:35:00 PM
From: Duke	Read Replies (1) \| Respond to of 947

Jakarta considers pegging rupiah to US dollar World Bank admits underestimating impact of corruption [JAKARTA] Bank Indonesia Governor Soedradjad Djiwandono said yesterday that the government is considering establishing a currency board that would peg the rupiah to the US dollar. "We're still studying the idea," Mr Soedradjad said to reporters after a lunch meeting with Trade and Industry Minister Tunky Ariwibowo and World Bank president James Wolfensohn, who's in Jakarta for a two-day visit. Johns Hopkins economist Steve Hanke, a leading proponent of this method of managing currency, met with Indonesian President Suharto earlier this week. A currency board replaces the role of a central bank, and maintains the peg between a local currency and the dollar by backing a country's total currency supply with US dollars. It's the system of currency management that's kept the Hongkong dollar pegged to the US dollar since 1983. One drawback, though, is that it requires a country to give up some control of domestic interest rates. It would also require Indonesia to add tens of billions of dollars to its national reserves. Mr Wolfensohn, stressing the caring face of international finance, said yesterday that the World Bank was accelerating funding to assist Indonesia's poor in the current economic crisis. He toured a densely-populated slum area of north Jakarta adjoining a container port and announced an agreement with the government to speed up a labour-intensive employment scheme. "The programme is intended to create more than 75 million days of low-wage jobs during the remainder of 1998," he said in a statement. But he admitted that the bank "made mistakes" in its analysis of Indonesia's debt problems and underestimated the economic impact of pervasive corruption. Along with most aid agencies, it also failed to appreciate the scale of the private corporate debts which helped wipe out four-fifths of the rupiah's value in the past year. Mr Wolfensohn is in Indonesia to discuss its US$4.3 billion (S$7.2 billion) contribution to the US$40 billion package put together by the International Monetary Fund. He refused to comment on calls for political reform, arguing that his brief was only an economic one. Nor could he be led to say what changes the Bank may make to its policy on Indonesia. Still, as Indonesia's economic problems escalate into a challenge to the 32-year rule of Mr Suharto, Mr Wolfensohn chose to meet more than 70 of the government's most prominent critics before seeing the president himself. Several government critics told him yesterday that economic reform won't work unless the political system is changed too. The present system is geared to interpret the will of Mr Suharto, and corruption arising from the links between political and economic power is endemic. That won't change without democratic reforms, they said. -- Bloomberg, Reuters

To: Rational who wrote (248)	2/4/1998 10:45:00 PM
From: Duke	Read Replies (1) \| Respond to of 947

Suharto holds back naming of his running mate PRESIDENT Suharto says he is sticking to the letter of the Indonesian constitution by refusing to name a running mate in the March presidential polls until parliamentary factions unveil their candidates for the vice-presidency. The Jakarta Post yesterday quoted a senior official as saying that Mr Suharto said it was the right of parliamentary groups to name candidates, not his right. Mr Suharto, 76, has said he will accept the nomination by the ruling Golkar party for a seventh five-year term in March, and he is assured of election by the 1,000-member People's Consultative Assembly (MPR). The focus is on his running mate -- and potential successor given his age and continuing concern over his health. The succession issue is one of the key elements relating to foreign investment in the nation which now is undergoing its worst economic crisis in decades. Alwi Dahlan, the head of the board for the propagation of the state ideology, Pancasila, said after visiting Mr Suharto on Tuesday that the president had told him it was the right of the various political factions in the MPR to choose a vice-president. "Why should they wait for me? This shows that many people don't understand the constitution. They expect me to name a vice-presidential candidate," Mr Suharto was quoted as saying. "I cannot name anyone because I'm not even a presidential candidate. I will be named a candidate only after certain procedures." The MPR meets on March 1 to elect their president and vice-president and endorse policy guidelines. -- AFP