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Bomb Terror Impacts Financial Market

Updated: May 27, 2018

Indonesia’s stock index and exchange rate fell on Monday (5/14), after a bomb explosion rocked the main police office at Surabaya.

Surabaya was attacked by a series of bombings a day earlier at three churches and at a Wonocolo flat. Frans Mangera, a spokesman for East Java police, said that the bomb that exploded near the headquarters of Surabaya injured at least 10 people, including four police officers. At least fourteen people, including six suicide bombers, were killed. Dozens were also injured in three separate bombings at churches on Sunday (5/13), according to police. The Islamic State group claimed responsibility for the attack.

The impacts of the bombing was the 1.4 percent decline in Jakarta Composite Index to 5,873.192 before closing 0.2 percent lower. The rupiah retreated 0.1 percent to 13,970 per US dollar. The bombings are certain to worsen market sentiment already hit by a selloff in the currency, bonds and stocks triggered by the exit of foreign investors from emerging markets amidst rising US dollar and US Treasury. While the rupiah tumbled last week to the lowest since December 2015, the yield on benchmark 10-year rupiah bonds jumped to a 13-month high. Stocks rebounded 2.8% last week after hitting their lowest since June.

The Minister of Finance (Kemenkeu), Sri Mulyani, has expressed confidence that the recent bombings in Surabaya will not deter investors from investing in the country as the law enforcers have started to seriously deal with the issue. The Institute for Development of Economics and Finance (INDEF) economist, Bima Yudhistira, said that the sooner law enforcement officers could arrest the suspects, the better it would be for the investment climate.

Even though the bomb has affected Indonesia's currency and stocks, it didn't impact Indonesia’s fundamental economy, the Governor of the Bank of Indonesia, Agus Martowardojo, confirmed.

Sources :


CNBC Indonesia

The Jakarta Post

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