REPUBLIKA.CO.ID, JAKARTA -- Bank Indonesia (BI) has anticipated negative impacts on the economy, such as the outflow of foreign capital, following the heightened political tension between the United States and North Korea in recent days.

"The pressure on geopolitical stability in Asia has increased following the increased political tension between US President Donald Trump and North Korean leader Kim Jong Un," BI Governor Agus Martowardojo stated here on Friday evening.

He noted that the volatility of the rupiah against foreign currencies was still below 3 percent.

"We are still paying attention to the world economic conditions, especially the US and North Korea," he remarked.

An analyst of Samuel Sekuritas Rangga Cipta estimated that the foreign investors would seek a safe haven to settle their capital, which in turn could depress the rupiah exchange rate.

Furthermore, BI monitored the US Federal Reserve's plan to reduce balance sheet this year.

The decline in the balance sheet will have an impact on US dollar supply and exchange rate stability in some countries around the world.

In general, Indonesia's economic fundamentals are still strong and able to withstand external economic pressures.

Foreign capital that had entered from January till the second week of Aug 2017 was recorded at Rp115 trillion. Strong economic fundamentals of 3.91 percent were also reflected in inflation as of the second week of Aug 2017.

Trump's warning to North Korea and Pyongyang's threat of possible armed retaliation drove investors away from stocks and other risky assets on Wednesday into textbook safe-havens like gold and Treasuries, Reuters had earlier reported.

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But despite the largest percentage drop on global equities index in over a month, US equities ended only slightly lower as healthy corporate earnings and a recent string of strong economic data enticed investors into beaten-down stocks.

Following Trump's remarks, North Korea on Wednesday said it was "carefully examining" plans for a missile attack on the US Pacific territory of Guam, which is home to a large US military base. US Defense Secretary Jim Mattis told Pyongyang it should stop any actions that would lead to the "end of its regime and the destruction of its people."

But while most traders appeared to favor safe-haven assets, bargain seekers helped Wall Street's three major indexes pare the day's earlier losses.

"It is amazing when you consider the headlines on just how calm the equity markets are and how they have taken things in their stride," Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina, remarked.

"The strong global economy, driven by strong earnings, is really helping to minimize some of these concerns. The global economy is really on some firm footing," he explained.

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