Indonesia's central bank, Bank Indonesia, has issued five policies to maintain monetary and financial stability during the global Covid-19 outbreak. Bank Indonesia Governor Perry Warjiyo said the bank would at first focus on intensifying its "triple intervention" on the financial market.
Perry said the bank would optimize intervention on the spot market, domestic non-delivery forward (DNDF) market and state bond (SBN) market to minimize volatile escalation of the rupiah's exchange rate.
"We're intensifying our triple intervention to stabilize the rupiah's exchange rate," Perry said at the Bank Indonesia headquarters in Jakarta on Monday as quoted by the Jakarta Globe.
Starting March 16, Perry said the bank would also lower the statutory reserve requirement (GWM) ratio on foreign exchange from 8 percent to 4 percent for conventional banks and Islamic banks.
Perry claimed this policy would increase foreign exchange liquidity by around $3.2 billion and strengthen the rupiah.
"We will also lower the rupiah's statutory reserve requirement by 50 basis points for banks that provide funding for export and import activities. This policy will be implemented for nine months starting April 1 in coordination with the government," he said as quoted by The Jakarta Globe.
According to Perry, Indonesian importers and exporters have been severly hampered by the Covid-19 outbreak, especially by disruptions in goods distribution and rising trading costs.
The BI governor said the central bank would also expand the scope and type of underlying transactions to provide alternative hedging instruments for foreign investors.
Last month, the central bank had already issued other policies to mitigate Covid-19's impact on the Indonesian economy by lowering BI's 7-day reserve repo rate (BI7DRR) to 4.75 percent, strengthening monetary operations strategy, adjusting the provision of macroprudential intermediation ratio (RIM), expanding the acceptance of QR Indonesian Standard (QRIS) and speeding up the electronification of social assistance fund and local government financial transaction.
(source: The Jakarta Globe)