Shops in Jakarta are reporting panic buying by people worried about price rises after another days sharp falls in the value of the rupiah. Some shops have closed altogether because they have run out of stock. The rupiah fell to a record low level, ending down eighteen per cent. Currency dealers say a lack of coherent response from the government, together with reports that the IMF may re-consider its aid package to Indonesia, are continuing to damage investor confidence in the economy. This report from Jonathan Head:

Queues of people have been lining up in supermarkets across the Indonesian capital, pushing shopping trolleys piled high with food and other goods. The collapse of Indonesia's currency to around one quarter of its value six months months ago is starting to cause panic as people try to spend their money before it falls any further.

Shops selling imported goods say they are running out of stock because suppliers wont accept payment in rupiahs. Some shops in up-market shopping malls have closed down altogether. Even the costs of some basic produces like rice and cooking oil are rising sharply.

One financial analyst said there is now a real danger of hyper-inflation as prices continue to escalate and people lose all confidence in the rupiah. Remarkably there has been no response from the government since President Suharto presented the annual budget two days ago.

The budget failed to impress the markets, making what most analysts said were over-optimistic predictions about the economy. They say the government must come up with far-reaching economic and political reforms if it wants to persuade investors to bring their funds back to Indonesia. So far there is no sign that it is ready to do so.

A team from the IMF is due to arrive in Jakarta at the weekend for scheduled talks with Indonesian officials. The market will be watchning closely for any indication that the IMF may be re-thinking the terms of the massive aid package offered to Indonesian last October - a package that has so far failed to restore confidence in the economy.