For the next 12 months, Hanna's forecast rate remains at 47 pesos per dollar, but the forward rate is 57.7 pesos. This is the worst forward rate among nine Asian currencies Hanna studied. ADB economist Sailesh K. Jha believes Indonesia is in a far worse situation than the Philippines, economically and politically, because of its problem of ethnic conflicts. Paralyzingly, the clashes are in areas that are rich in mineral resources. Dong Tao of Credit Suisse First Boston also picks Indonesia, Philippines and Thailand, as Asia's problem countries.
Fiscal sustainability is a key issue.
He warns that these three countries need to improve their electronic production lines and for that they must attract Japanese or Taiwanese capital. However, Japanese capital is not moving much, while Taiwan's is headed to China. If that's the case, then trouble is on the way. Indonesia is suffering from capital flight. As for the last quarter of the year and next year, well, that's another story.