(21 May 1998) English/Nat
The resignation of Indonesian President Suharto gave a quick boost to Asia's troubled markets on Thursday.
Although most regional currencies ended Asian trading hours flat to a touch higher against the U-S dollar, the response among traders and analysts in Singapore ranged from cautiously neutral to deeply bearish.
Shoppers were making the most of the quick boost Suharto's announcement made to the financial market in Singapore.
At Singapore's financial centre, brokers were quoting the U-S dollar at an indicative rate of 11,200 rupiah, not too different from its level late on Wednesday.
Shares in the country rose.
The benchmark index was up 2.7 percent from Wednesday.
But Kobus Van Der Wath, Chief treasury economist, Asia Pacific Standard Chartered Bank said the slight increase is no cause for celebration.
SOUNDBITE: (English)
"If you look at stock markets across the region, it's perhaps a little bit more mixed and a little bit more positive. The currencies, I think, will still remain vulnerable to further setbacks in confidence in Indonesia over the months to come. Simply because the problems are without a solution at this point in time and Suharto stepping down does not really solve the intense macro economic and little on the political side. Macro economic and social problems on the employment side, with stoppages and blockages and the payment of wages and salaries and in the end, then, also escalating food prices, will fuel the tensions in growing months.
SUPER CAPTION: Kobus Van Der Wath, Chief treasury economist, Asia Pacific Standard Chartered Bank
Although Suharto's departure calmed tensions in Jakarta, many observers felt that his appointed successor, vice president Bacharuddin Habibie, is too close to the old
regime.
They feel that Habibie won't win the confidence either of Indonesia's opposition groups or the international financial markets.
SOUNDBITE: (English)
"Initially, as we're seeing already, we've got a lot of celebrations in the streets. But I think that, Habibie and Suharto were probably counting on the fact that this change may actually divide the opposition in terms of what they're going to do next. While some of the opposition members may be simply satisfied that Suharto's gone, others will say well, no, really we'll have more of the same thing, because Habibie was known to be extremely close to the president, personally, over many years and what we really need to do is to get rid of that, every thing associated with the president and not simply the president himself. So I think that there may be some confusion with the opposition camp over that."
SUPER CAPTION: Dr Bruce Gale, Singapore Regional Manager, for Political and Economic Risk Consultancy
With the Jakarta market officially closed for the Ascension day holiday, there was concern from traders that the Indonesian rupiah will suffer when trading gets underway again.
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