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Indonesia's rupiah crashes to a new low against the US dollar

Associated Press - October 3, 1997

Jakarta – Indonesia's currency crashed to a new low today when it hit 3,725 rupiahs against the U.S. dollar before recovering slightly.

The plunge carried over into the Jakarta Stock Exchange, where the main index dropped 4 percent, or 21.447 points, to 515.477 points.

Brokers in Jakarta said both foreign and local investors panicked and dumped shares to cut their losses when the rupiah fell through the 3,700 barrier against the dollar.

Currency dealers said local companies bought the dollar either to cover their upcoming matured dollar-denominated debt or for import purposes.

The rupiah climbed back to 3,410 rupiah in late trading in the spot market.

The currency has lost more than a third of its value against the dollar since the beginning of the year and, like other Southeast Asian currencies, has suffered volleys of speculative attacks since July.

Central bank Governor Soedradjad Djiwandono told reporters that importers and companies repaying offshore loans have driven the rupiah down and the dollar higher since last week.

Dealers added that some Indonesian conglomerates were heard selling the rupiah.

They also said the nation's largest private bank, PT Bank Central Asia (BCA), unloaded the dollar when the unit was trading between 3,600 rupiah and 3,650 rupiah. BCA's owners include Indonesia's richest man, Liem Siou Liong, President Suharto's eldest daughter Siti Hardiyanti Rukmana, and her brother Sigit Harjojudanto.

Dealers believe the BCA sold around $100 million.