Jakarta – Indonesian officials denied on Tuesday that President Suharto was seriously ill after financial markets plunged on rumours the 76-year-old leader was ailing.

'Father is in good health. He is taking a rest. He is making use of his time to play with the grandchildren," Suharto's second son, businessman Bambang Trihatmodjo, told reporters.

The rupiah went into free-fall in the morning on rumours starting in Tokyo and Singapore that Suharto was ill. The currency touched a record low of 4,600 against the dollar, a drop of some 450 points.

It later recovered to 4,530/60 against the dollar after Suharto's son and a senior government official separately said the president was in good health.

The stock market index plunged over 1.5 percent to a day's low of 416.34 points before recovering to 422.68 in late trading.

Trihatmodjo was speaking on the sidelines of a meeting of the country's highest body, the People's Consultative Assembly, which will elect a new president in March next year.

Suharto is widely expected to seek a seventh five-year term in office in the presidential polls.

There is intense speculation over the vice-presidential candidate, who would be Suharto's potential successor given his age.

Suharto cancelled a trip to Tehran this week for a meeting of the Organisation of Islamic Conference (OIC), but he was so far expected to attend an informal summit of the Association of South East Asian Nations (ASEAN) in Kuala Lumpur next week.

The president flew to Germany in mid-1996 for a thorough checkup and doctors there said he was fine for a man his age. Rumours that he was ailing have persisted, however, despite official denials.

State Secretary Murdiono also told reporters after meeting Suharto at his home on Tuesday that rumours the president had been taken to hospital were baseless.

'According to his doctors, the president is healthy," he added.

Tonny Soekaton, secretary-general in the Department of Information, earlier told Reuters that Suharto was fine. 'He is in good condition, there are no problems at all," he said. "The president is just taking a rest at home."

Suharto's doctors advised him last week to take a 10-day rest after he returned from a strenuous 12-day tour that took him to southern Africa, Canada and Saudi Arabia.

Officials said the president's doctors had determined he was otherwise in good health.