Indonesia's fragile currency plunged 9 percent Wednesday, jeopardizing International Monetary Fund efforts to haul the Southeast Asian nation's shattered economy out of a yearlong crisis.
The drop was a big blow to President B.J. Habibie's government, which has pushed for democratic reform since last month's ouster of the authoritarian leader Suharto.A drastic weakening of the currency also could worsen rising inflation and unemployment, problems that contributed to riots and protests that led to Suharto's downfall after 32 years in power.
Some shopkeepers in Jakarta, the Indonesian capital, closed Wednesday, fearing the rupiah's fall would spur more price increases and lead to street violence.
The Indonesian currency closed in Jakarta at 16,700 rupiah against the U.S. dollar, down from 15,150 rupiah a day earlier.
Dealers said local banks were rushing to snap up dollars to pay off debts. They predicted more demand for dollars to finance Indonesian imports of basic commodities, including medicine.
Dragged down earlier this week by the weakening Japanese yen, the rupiah failed to strengthen even as the yen rose against the dollar Wednesday in trading.