President Says No Danger of Repeat of Asian Crisis
JAKARTA ~ President Susilo Bambang Yudhoyono said this week there was no danger of a repeat of the Asian financial crisis as the sharemarket took its biggest hit in a decade and the currency nosedived.
“I am not saying that everything will be perfectly secure but I hold the belief that we will not experience the nightmare that was the 1998 crisis again. I am completely certain,” Yudhoyono told reporters.
Indonesia was among the economies that were hit hardest by the 1997-98 financial crisis, requiring a massive lifeline from the International Monetary Fund to pull it back from bankruptcy and save the spiralling rupiah.
“In facing this global crisis we have to stay optimistic and united and try to maintain our economic growth… We need to learn from the 1998 crisis,” Yudhoyono said.
The central bank earlier said the economy was on track to grow at around 6.3 percent in the third quarter despite the global instability.
The president earlier met his chief economic ministers to discuss the international financial turmoil triggered by the collapse of the subprime mortgage market in the United States.
Indonesian shares plunged 10 percent by the close of trade as the market reopened following a break last week at the end of the fasting month of Ramadan.
The Indonesian Stock Exchange’s main index dropped 183.77 points to 1,648.74 on volume of 4.6 billion shares worth Rp4.6 trillion ($487.6 million).
It was the market’s biggest one-day percentage fall since 1998, an exchange official said.
“After the long holiday last week, we were catching up on losses made by global equity markets due to the financial crisis in the US,” Kim Eng Securities head of research Katarina Setiawan told Dow Jones Newswires.
The rupiah ended at 9,590 to the dollar, its lowest level against the greenback in more than two years.
“The rupiah will continue to be under pressure as long as the global uncertainties persist,” a dealer with a foreign bank said.
Officials earlier announced Indonesia’s inflation rate had risen a faster-than-expected 12.14 percent in September against a year ago, increasing the chances of an interest rate hike on Tuesday.
Analysts had forecast an annual rate of 11.99 percent, but said prices were driven higher by the cost of food and housing in the Ramadan festive season.
Central Bank Indonesia Governor Boediono sought to reassure markets that while the economic slowdown in the United States would hurt Indonesia it would not trigger another crisis like 1997-98.
“The situation in 1997-98 was different. The conditions of banks at the time were different from now, while the epicenter of the present crisis is not here but in the US,” Boediono was quoted as saying by the Antara news agency.
Finance Minister Sri Mulyani Indrawati, who also attended the special cabinet meeting with the president, appealed for calm and responsible reporting by the media.
“Please do not make a headline out of rumors. Recheck all information so that the stories being published really reflect the real situation,” she said.