More unstable and unstable a country is, the more its currency will depreciate. And Indonesia seems to be feeling the effects of its currency, the Indonesian Rupiah (IDR).
The rupiah plunged 1 percent to 10,230/U.S. dollar shortly after the incident at two Jakarta hotels which killed 9 people. It’s an extremely regrettable event as Indonesia has recently voted in an election which has been overwhelmingly voted in giving the President Susilo Bambang Yudhoyono a strong mandate. There is a hope that this will quicken reforms in the largest economy of Southeast Asia and stabilize the Indonesian Rupiah.
Following after the Bali accident, Indonesia has not seen a major bomb Rupiah138 blast for several years. Compared to the last incident in Bali in 2004, the Indonesian population is more prepared this time, with a faster reaction in the area of media handling and the treatment of the injured and the moving on factor that sees people continue their daily routines as normal.
So, even though the incident of the bomb blast may be a short term dent for the Indonesian Rupiah however, Indonesia’s economic fundamentals are strong. Contrary to Singapore where there has been a shrinkage in growth, Indonesia is still able to increase their economic growth rate to roughly 3.5 percent, despite the economic and financial crisis . This long-term trend is likely to last.
The Indonesian Rupiah (IDR) will continue to stabilize and grow in the longer term against the US Dollar (USD). After the tragic bomb explosion in Jakarta it appears that the Rupiah has gained some of the losses. At present it is worth $1 U.S. dollar compares to 10101 Indonesian rupiahs. Indonesians are hopeful to see when the Indonesian Rupiah (IDR) can trade below 10,000 levels. This could happen in the near future, unless another bomb blast takes place.