Indonesia keeps stock exchanged closed

Indonesia keeps stock exchanged closed

Indonesia keeps stock exchanged closed

Updated 19 December 2011, 15:15 AEDT

Indonesia has kept its stock exchange shut for a second day, after the index lost more than a fifth of its value this week.

Officials are scrambling to calm fears that southeast Asia's biggest economy faces a new crisis.

Indonesia was the country hardest hit by the Asian financial crisis a decade ago due in part to large corporate foreign debt and a weak banking system.

Political upheaval also meant it took longer for the country to recover.

But President Susilo Bambang Yudhoyono and his economic team have sought this week to reassure investors that the economy is in much better placed now to weather any crisis.

The chairman of Indonesia's capital market watchdog Fuad Rahmany says they suspended the stock exchange because the market had become panicky and irrational.

He says they needed to give enough time for the market to digest information and take a proper decision, but he did not say when the market might reopen.