Rupiah falls follwoing explosion

The Jakarta Post, Jakarta

The rupiah and stock index fell on Monday in a knee-jerk reaction to a small explosion at the office of the General Elections Commission (KPU).

Despite no injuries being reported, the blast, which the police said caused only a little damage, prompted a nervous reaction in the market on fear that the incident could be the precursor to an escalation of attacks within the current presidential election period, dealers said.

"It turned out to be small, but it still created uncertainty; not only because the market fears for more occurrences in the future. It has now caused a delay in the announcement of the final result of the election," a dealer from a state-owned bank said.

He was referring to the planned announcement of the final tally for the first-round presidential election held in July 5, which was most likely to be delayed.

The rupiah closed at 9,145 per dollar, lower than Friday's close of 9,070. It was the first time in five days the local unit had ended lower.

Following the news, the local currency weakened to as low as 9,160 per dollar, although it regained some ground to rebound slightly in the second session on suspected dollar selling by state-owned banks, the dealer added.

With investors expected to remain on the sidelines waiting for further developments, the local currency is set to undergo pressure in the next few days, although "the negative sentiment will be temporary, betting on how fast the authorities can react to this."

In the stock market, the Jakarta Stock Composite Index also took a beating from the negative sentiment arising from the blast: It was down by 0.6 percent as compared with the previous close.

The index closed down 4.56 points at 761.80, on a volume of 2.09 billion shares traded, worth Rp 765.64 billion (US$85 million).

As in the rupiah's case, the index was hit hard after news of the explosion broke out but it slowly managed to recover from an intra-day low of 749.02 points as investors bought back blue-chip shares that declined on panic selling.

"The index was also affected by the losses in most of the region's bourses following Wall Street's overnight losses on Friday, a dealer at a local securities firm said.

Among the biggest losers were state telecommunications firm Telkom and the nation's largest car producer, Astra International, which fell respectively by Rp 50 and Rp 100.