Geoff Spencer, Jakarta – Spooked by Indonesia's uncertain political future and worried about a mountain of debt, panicky traders dumped the rupiah Thursday, pushing the battered economy into a new phase of desperation.
The currency plunged to an astonishing record low of 16,500 rupiahs against the U.S. dollar – a drop of 85 percent compared with its value of seven months ago when Asia's financial crisis first erupted.
The rush to sell rupiahs started as soon as trading began in Jakarta.
"It was like a bomb," said Chia Woon Khien, an analyst with SE Banken in Singapore.
A big currency fall two weeks ago resulted in a wave of panic-buying in supermarkets and stores.
There was no sign of that Thursday. Even so, commercial banks reported long lines of customers withdrawing rupiah funds and exchanging currencies.
"I just don't believe in the rupiah anymore," said one man who, like hundreds of others, opened a U.S. dollar bank account to protect his savings.
Suharto made no public comment about the latest currency crash.
In contrast to anxious scenes in Jakarta's currency dealing rooms throughout the day, the 76-year-old leader spent a jovial evening, entertained by traditional music and dance at a trade bazaar held to promote a new business venture by one of his grandsons.
The rupiah recovered to around 12,000 to the dollar later in the day, but only after Indonesia's central bank reportedly intervened by selling dollars.
It was the rupiah's third all-time low in as many days and far below its close of 11,550 on Wednesday.
The rupiah's fall dragged down other Asian currencies and was blamed for 4.8 percent drop on the Jakarta Stock Exchange's main index.
Dealers said they were worried about a lack of government action to tackle an estimated $65 billion foreign currency debt owed by hundreds of companies facing bankruptcy. They're also concerned about who might one day succeed Suharto. Suharto decided Tuesday to stand for a seventh consecutive five-year term. A 1,000-member assembly dominated by his supporters will hold a March presidential election that he is almost certain to win.
Nevertheless, dealers fear the future following reports that Suharto's old friend Bacharuddin Jusuf Habibie, 61, might be elected vice president.
Habibie, the controversial research and technology minister, favors costly national projects that have been criticized as extravagant.
Because of Suharto's age and concerns about his health, some analysts believe the next vice president might one day become the leader of the world's fourth-most populous nation.
Also Thursday, a newspaper reported an Indonesian court sentenced a student to seven months in jail after convicting him of defaming Suharto.
Joni Fadli, 21, a university student from Bandarlampung on southern Sumatra island, was found guilty of handing out anti-Suharto leaflets in Jakarta during parliamentary elections in May.
He was sentenced in central Jakarta's district court, the daily Kompas newspaper reported. On Tuesday, two other young men who handed out the same leaflets were sentenced to one year in prison by another court.
The leaflets urged Suharto's family to publicly reveal their assets and business interests and demanded that the government stamp out corruption.