Indonesia: BI injects IDR300tr in liquidity into financial markets, banks as rupiah slides

  • Bank Indonesia (BI) has continued to inject liquidity of up to IDR300tr into the financial markets and banks to help support the country’s crashing currency as foreign investors sell off Indonesian assets over COVID-19 fears.
  • BI Governor Perry Warjiyo said the central bank had bought back government bonds worth IDR168.2tr in 2020, with bank repurchase agreements (repos) to provide another IDR55tr. The central bank’s policy of lowering the reserve requirement ratio will also free up another IDR75tr for banks to finance businesses, he added.
  • “The central bank will continue to intervene through the spot market, domestic non-deliverables forward and bonds if needed.”
  • The central bank has recorded a IDR125.2tr capital outflow from government bonds, the stock market and BI certificates so far in 2020.
  • Foreign investors sold IDR112tr of government bonds and IDR9.2tr of Indonesian shares, with most of the sell-offs recorded in Mar 20.
  • The Rupiah has weakened almost 20% against the greenback in 2019, to 16,500 per USD as of 25 Mar 20. It reached the lowest level of 16,625 on 23 Mar 20, a level unseen since the 1998 financial crisis. The Jakarta Composite Index (JCI), meanwhile, has lost more than a third of its value.

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