Asian Markets Falter On Concern About Indonesia Bailout Package

Stocks stumbled across much of Asia on Monday amid worries that a dispute between Indonesia and the International Monetary Fund would derail a $43 billion rescue package to that battered economy.

But stocks were barely changed in Japan and rose in Europe, sending a mixed signal for Wall Street’s return Tuesday.

The IMF is warning Indonesia that its plan to peg the value of its rupiah to the dollar with a currency board system would cripple its chances of economic recovery and jeapordize the IMF-led bailout package.

A currency board would introduce a fixed exchange rate for the rupiah against the dollar. The IMF is worried keeping the rupiah at a fixed rate would be too costly for the government, or require very high interest rates.

But President Suharto, facing social unrest in his country because of high food prices, has shown no signs of backing away from the plan.

The day’s worst losses were in Singapore, were the main stock market index fell 4.6 percent. Malaysia and the Philippines each saw their key indexes fall 3.4 percent, while Thailand’s slipped 3.2 percent.

Stocks also fell early in Japan, with the Nikkei Stock Average off as much as 190 points at one point, but the index rallied to finish down just 15.49 points, or 0.09 percent, closing at 16,775.52.

Indonesia’s stock index managed to gain 2.0 percent amid the turmoil, but its overall market was lower with declining issues outnumbering advancers by more than a 2-to-1 margin.

Despite Monday’s losses, most Asian markets are up sharply this year on hopes that the worst of the region’s crisis is over. So far in 1998, key indexes are up 14 percent in Indonesia, 11 percent in Malaysia, 10 percent in Japan, 8 percent in the Phillipines. One exception is Singapore, down 3 percent.

In Europe, stocks rose Monday in thin trading with no cues provided from U.S. markets, which were closed for Presidents Day.

London’s FT-SE 100 index rose 38.6 points, or 0.7 percent, to move within 10 points of a record high at 5,619.9. France’s main stock index, the CAC, rose 1.2 percent, and Germany’s DAX edged up 0.4 percent.