Suharto blames speculators, El Nino
President says these two factors are responsible for region’s economic turmoil.
PRESIDENT Suharto has blamed currency speculators and the El Nino climatic phenomenon for the region’s recent economic turbulence.
The two had brought “economic and social damage” to Indonesia and other Asian countries, he said at the closing of the 103rd conference of the Organisation of Petroleum Exporting Countries here on Monday.
Directing a broadside at currency speculators in particular, he said that the “hard work and sacrifices of countries over several decades are being wiped out overnight” by their trading activities.
He said: “Currency trading, which brings huge profits to traders, can cause tremendous losses to nations.
“Most countries would be susceptible to such attacks as most currencies had been transformed into a commodity, and were not a mere medium of exchange.”
Mr Suharto’s comments follow on the heels of those of Malaysian Prime Minister Mahathir Mohamad, who has lashed out repeatedly at currency speculators for plaguing Asia with a financial crisis.
Over the past few months, the value of the Indonesian, Thai, Filipino and Malaysian currencies crumbled under the assault of speculators.
Mr Suharto stopped short of calling for controls on currency speculation, saying that Indonesia, “with other friendly countries and financial institutions, is taking the appropriate measures to weather the storm”.
The Indonesian government, for example, had attempted to prop up the rupiah and restore confidence with tight liquidity and high interest rates.
It also received a pledge of US$23 billion (S$36.8 billion) from the International Monetary Fund.
Mr Suharto said that economic woes in Indonesia and other countries were compounded by the worst drought to hit Indonesia in 50 years, which was brought about by El Nino.
“This has been the main factor for the forest fires in several regions causing social and economic losses not only for Indonesia, but also for our neighbouring countries,” he said.
He touched on the same point again yesterday at a conference at the Institute of Technology in Bandung, underscoring the point that the dry season was responsible for the fires.
El Nino is a climatic phenomenon which sucks moisture from the western side of the Pacific Ocean, disrupting normal weather patterns and inducing prolonged dry spells.