Rising Investment Risks in Indonesia

The depreciation of the Indonesian Rupiah, a consequence of increasing uncertainty in the global financial market, triggered a rise in investment risk (CDS/Credit Default Swap) in Indonesia. The CDS on Indonesian government bonds with a 5-year tenor jumped 1,756 basis points to 178.86 on November 11, 2016, from 161.3 the previous day. Market concerns over Donald Trump's potentially protectionist policies caused volatility in the Rupiah exchange rate, the bond market, and the Indonesian stock exchange.

The government bond index (total return) on November 11, 2016, fell 1.12 percent to 206.897 from the previous day's close. The corporate bond index (total return) also corrected by 0.15 percent to 221.795 from the previous day's close. As a result, the composite bond index (ICBI) weakened by 1.01 percent to 209.753 compared to the previous day's position.

The Jakarta Composite Index (IHSG) on November 11, 2011, experienced a significant correction of 4 percent to 5,231.971. The Rupiah also weakened by 1.86 percent to Rp 13,383 per US dollar from the previous day's close.