Whereas in previous times a major terrorist attack in the West would lead to a sharp, short-term sell-off on equity markets, the latest attack in Paris had a relatively small impact. This could be caused by markets becoming somewhat used to such vicious attacks. Since the 09/11 Twin Towers attacks in New York (when it took one month for the Dow Jones Industrial Average to regain pre-09/11 price levels), equity markets have recovered more quickly (while the plunge was less sharply) with each following terrorist attack (Bali bombing, Madrid commuter train bombings, and London bombings). These cases show that markets recover relatively quickly and thus makes them more resilient to terrorism. It could also be caused by markets' willingness not to let terrorism impact negatively on stock trading.

Today, the central bank of Indonesia (Bank Indonesia) conducts its monthly policy meeting. Although there is pressure coming from businesses and Indonesian Vice-President Jusuf Kalla (who requests the central bank to cut its relatively high interest rate environment in order to create room for accelerated economic growth), it is assumed by most analysts that Bank Indonesia will keep its benchmark interest rate (BI rate) at 7.50 percent (where it has been since February 2015). Given that the country's inflation has eased markedly and is bound to fall within the central bank's full-year target, Bank Indonesia seems to have room to cut its BI rate (while the country's current account balance has also improved markedly recently). However, due to the looming Fed Fund Rate hike (perhaps before the year-end), there may emerge heavy pressures on the rupiah as capital flows back to the USA as these (safer) assets become more attractive.

Bank Indonesia is not expected to allow the rupiah to depreciate far from the current level (approx. IDR 13,700 per US dollar) as a weak rupiah is a drag on overall investment growth, while the country's export performance has not been boosted by the weak currency. Typically, a weak currency makes a country's products more competitive on the global market. However, Indonesia is still heavily reliant on exports of (raw) commodities.

Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) appreciated 0.15 percent to IDR 13,711 per US dollar on Tuesday (17/11).

Indonesian Rupiah versus US Dollar (JISDOR):

| Source: Bank Indonesia