Rupiah at 1998 low defies logic, says Morgan Stanley forecaster

Kuala Lumpur

THE last time a dollar bought as many rupiah as it does now, Indonesian dictator Suharto had just been ousted and the government was paying 70 per cent to borrow money for a month after an International Monetary Fund bailout.

Sixteen years later, the country pays less than a 10th of that for three-month bills, it is rated six levels higher by Moody's Investors Service and has a new president elected on the basis of his administration of Jakarta. Geoffrey Kendrick, Morgan Stanley's Hong Kong-based head of Asian foreign exchange and interest rate strategy and the most accurate rupiah forecaster, said that he didn't "have any logic to apply" to the sudden drop and is sticking for now to his end-March estimate of 12,400 rupiah per dollar, stronger than Monday's close of 12,698 rupiah.