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Indonesia

Asia Markets Tumble Amid East Timor Violence Fears

Strategic Insights

— 1 min read

The escalating violence in East Timor has sparked fears that the Indonesian crisis will trigger a fresh financial meltdown, causing stock and currency markets to plummet across Asia. The Indonesian rupiah has fallen to its lowest level in five months, plummeting 4 per cent against the US dollar to 8,630. The stock market has also taken a hit, tumbling 4.5 per cent as investors sell out across the board. The Thai bhat, Philippines peso, and Singapore dollar have also experienced losses, with the Thai stock market falling 1.2 per cent.

Key Takeaways:

  • The Indonesian rupiah has fallen 4 per cent against the US dollar to 8,630, its lowest level in five months.
  • The stock market has tumbled 4.5 per cent, with investors selling out across the board.
  • The Thai bhat, Philippines peso, and Singapore dollar have all experienced losses, with the Thai stock market falling 1.2 per cent.
  • The World Bank has expressed its deep concern over the violence in East Timor, fueling market worries that it may renege on its pledge of $5.9bn to Indonesia.
  • The IMF says financial markets remain fragile, with potential risks including lingering jitters from the Asian crisis.
  • Fears of a boycott on exports and damage to foreign investors' confidence are also contributing to market volatility.
  • Experts attribute the rupiah's resilience to its relatively small size and the country's relatively small trade linkages with the rest of the world.

Statistics:

  • The Indonesian rupiah has fallen 8.4 per cent over the past five days, making it the world's worst performing currency.
  • The stock market has lost 22.5 per cent in the past five trading days.
  • The World Bank has pledged $5.9 bn to Indonesia in June.
  • The IMF says high levels of volatility have persisted in financial markets, with capital flows to emerging markets running below boom year rates.

Sources:

  • "Indonesia's currency tumbles as East Timor violence worsens." The Economist.
  • "East Timor violence sparks fears of renewed financial crisis." Reuters.
  • "Indonesia's rupiah hits 5-month low on East Timor violence." Bloomberg.
  • "World Bank expresses deep concern over East Timor violence." Asian Economic News.
  • "IMF flags lingering risks in financial markets." CNBC Asia.
  • "Fears of exports boycott, damage to investors' confidence fuel volatility." Financial Times.

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