Jarkata
09 October 2008
Indonesia closed its stock exchange for the second day to halt a flurry
of selling that sent the main stock index plummeting more than 20
percent this week, while Asian trading ended mixed. VOA's Nancy-Amelia
Collins has more from Jakarta.
Trading on the Jakarta Stock
Exchange was canceled for a second straight day and officials say it
may stay closed for the remainder of the week.
Stock exchange
president Erry Firmansyah said it will remain closed to give investors
a chance to "calm down before they make decisions."
Indonesia's
benchmark composite index has dropped more than 20 percent this week,
driven by the financial turmoil in the United States.
Traders attributed the fall to selling by major foreign investors.
Fauzi
Ichsan, senior economist at Standard Chartered Bank Indonesia, says the
global financial crisis is likely to impact only Indonesia's stock
market and currency.
"I think it would affect the real economy
for example, if the equity market continues to tank and foreign
investors continue to sell their Indonesian shares," he said. "And with the
rupiah they get they change to dollars, and the rupiah becomes under
pressure, the rupiah tanks, and imported inflation accelerates, and
therefore headline inflation also accelerates, then that would hit the
real economy."
But Fauzi says the economic impact of the global
economic crisis is likely to be limited in Indonesia.
"As long as the
fall, the weakening of the equity market is confined to the so called
economic elite of Indonesia, the impact on the real sector, on the real
economy is negative, but it is likely to be limited compared to similar
impact in the U.S," he said.
The central bank senior deputy
governor Miranda Goeltom said the government may extend a guarantee on
deposits, similar to moves made by other countries.
The plunge
in the stock markets Wednesday prompted coordinated rate cuts by
central banks in Europe, the United States, the Britain, Canada, and
China in an attempt to stave off a global recession.
Central banks in South Korea and Taiwan also cut their rates hoping to rally Asian shares.
But
trading on Asian markets ended mixed with the Hang Seng in Hong Kong
closing with a gain of more than three percent and Seoul's index
trading higher, but markets in Japan, Taiwan, Manila, Sydney, and
Wellington fell.