Turmoil In Asia Worsens Indonesian Currency Loses 26% Of Value In One Day

Indonesia’s currency sank to an all-time low Thursday, losing a quarter of its value in a single day and sending thousands of panicked residents to supermarkets where they snapped up everything in sight.

Ignoring an army appeal for calm in the world’s fourth most-populous nation, Indonesians lined up more than 20-deep at cash registers to buy sugar, rice, cooking oil and whatever else they could grab before yet another price rise.

The plunge of the rupiah apparently was driven by fears that the International Monetary Fund will yank back a bailout package extended late last year when Asian economies began falling like dominoes. The IMF is losing patience with Indonesia’s failure to implement reform measures that were required for the $40 billion in rescue money.

Financial analysts warned that the rupiah’s dreadful performance, compounded Thursday by a record tumble on the stock market, could leave many companies unable to pay the interest on their foreign-currency debts, thus forcing them into bankruptcy.

While President Suharto has yet to face a credible opposition in his 30-year reign, the prospect of social unrest triggered by inflation and unemployment is looming. The army has pledged to back Suharto in the event of widespread tumult.

For half a year, Indonesia’s 198 million people have remained calm as their currency has continued to slide. They have maintained faith that the 76-year-old president would revive the economy in the same way he built it up years ago.

But their confidence plunged Thursday - along with the rupiah, which fell 26 percent. The dramatic one-day drop leaves the rupiah down 76 percent since the country’s July currency depreciation.

Thousands of people picked grocery store shelves clean. “I only wish I could buy more. Who knows what is going to happen?” said one woman as she and her family pushed five shopping carts of groceries.

To calm rattled nerves, state-owned television flashed pictures of a national rice stockpile, and quoted officials saying the nation’s food supplies remained plentiful - despite the need to import rice because of prolonged drought.