BI introduces five follow-up measures against COVID-19 risks

BI introduces five follow-up measures against COVID-19 risks

Logo of Bank Indonesia (Antara)

Firstly, Bank Indonesia (BI) has intensified the triple intervention policy to ensure that the rupiah exchange rates move in line with the currency's fundamental value and market mechanisms
Jakarta (ANTARA) - To strengthen coordination and the various policy measures already taken, Bank Indonesia today introduced five follow-up policy measures to maintain monetary and financial market stability to mitigate the COVID-19 risks. Firstly, Bank Indonesia (BI) has intensified the triple intervention policy to ensure that the rupiah exchange rates move in line with the currency's fundamental value and market mechanisms, Executive Director of Bank Indonesia (BI) Communication Department Onny Widjanarko said in a statement received in Jakarta, Monday.

To that end, Bank Indonesia will optimize its intervention strategy in the DNDF market, spot market and SBN market to minimize the risk of increasing the rupiah exchange rate volatility.

"Then, Bank Indonesia will lower the FX reserve requirements for commercial banks from eight percent to four percent, effective March 16, 2020, which will increase FX liquidity in the banking industry by around US$3.2 billion and simultaneously alleviate foreign exchange market pressures,"

Thirdly, Bank Indonesia will lower the rupiah reserve requirements by 50bps for banks’ financing export-import activity in coordination with the government.

Effective from April 1, 2020 for nine months before a further review, this policy is expected to facilitate export-import activity through lower costs/fees.

Related news: Inflation target can be maintained until 2020-end: BI
Related news: BI pushes loan growth down to 9-11%


"Fourth, BI will expand the range of underlying transactions available to foreign investors to provide alternative hedging instruments against rupiah holdings," Widjanarko remarked.

Fifth, Bank Indonesia reaffirmed that global investors can utilize global and domestic custodian banks to conduct investment activity in Indonesia.

Moving forward, Bank Indonesia will continue to rigorously monitor the financial markets and economic developments, including the impact of COVID-19, while strengthening the policy mix and coordination with the government and other relevant authorities to maintain economic stability, build economic growth momentum and accelerate structural reforms. 

Related news: BI weighs use of instruments to reduce economic impact of coronavirus
Related news: BI stresses greater cooperation to restore global conditions


Comments