Indonesian Economy Not Jolted by Hotel Attack

Friday’s deadly bombings at the Ritz-Carlton and JW Marriott hotels in Jakarta had a limited impact on the trading of domestic stocks, bonds and the rupiah.

Indonesia's shares initially tumbled more than 2 percent after a pair of powerful explosions killed nine and wounded at least 50 people at the upscale Ritz-Carlton and Marriott hotels in Jakarta. The country's currency, the rupiah, dropped almost 1 percent against the dollar. However Edwin Sinaga, an analyst from PT Financorpindo Nusa said that the bombings only had a short-term effect. “The bombings had only a short-term effect on the stock market and will have no impact on the economy,” said Edwin Sinaga. Foreign investors have poured into Indonesian equities and the rupiah of late, attracted by the country's comparatively healthy banks, commodities sector and its relative political stability, though corruption is still rampant. President Susilo Bambang Yudhoyono was re-elected last week in what was considered a largely peaceful poll. The rupiah sagged on news of the bombings, but quickly regained its footing. Bank Indonesia is believed to have intervened to support it. According to Bloomberg, The rupiah fell as low as 10,223 against the dollar at about 1 p.m., before recovering to the 10,175 level by 5 p.m. Deputy Governor Hartadi A Sarwono from the Bank of Indonesia said that demand for the dollar versus the rupiah, an indicator of capital outflow, was not especially strong. “We are doing our best so the effect will be contained,” he said.