Governor of Bank Indonesia (BI), Perry Warjiyo, said the central bank has bought nearly to Rp25 trillion (US$1.79 billion) of government bonds since last week - Photo by Mandiri Sekuritas

JAKARTA (TheInsiderStories) – Governor of Bank Indonesia (BI), Perry Warjiyo, said the central bank has bought nearly to Rp25 trillion (US$1.79 billion) of government bonds since last week. The policy taken to stabilize the yields and Rupiah amid market jitters over the coronavirus outbreak in China.

“The central bank has always been in the market during good times or bad times, during capital outflows from coronavirus that affected market stability,” he told the audiences at one seminar in Jakarta yesterday (02/05).

Since last week, the Bank has intervened the bond, currency and non-deliverable forwards markets to protect the Rupiah from the coronavirus influenced. The currency posted its first weekly loss in nine as foreign investors pulled out more than $560 million in the first three days of last week from the nation’ sovereign bonds.

The decline brought Rupiah ranks second weakest Asian currencies after the Chinese yuan in Monday’ trading and the Chinese yuan exchange rate fell sharply to 1.57 percent.

The weakening of the exchange rate was also suffered by almost all Asian currencies, such as the Japanese Yen, the Hong Kong Dollar, Singapore Dollar, Taiwan Dollar, South Korean Won, Indian Rupees, and Malaysian Ringgit.

As the virus continues to spread rapidly beyond China’ borders, prompting extraordinary travel restrictions by several countries including Indonesia, policymakers around the world are stepping up action in response to a global sell-off. China reduced rates by 10 basis points and injected $174 billion cash into the financial system Monday as markets plunged on the resumption of trade after the Lunar New Year break.

Since last week, Warjiyo warned of unprecedented fears as the virus continued to migrate beyond China and the epicenter of the epidemic in Wuhan. Indonesia has ordered the suspension of direct flights to and from mainland China as of Feb. 5 and has already halted visa on arrivals for Chinese citizens.

“So far what we have felt, and also other central banks are also feeling, is the impact of the coronavirus through the financial markets. We are seeing reversals including from equities and bonds,” he told at a Bank Indonesia conference in Bali.

Warjiyo said authorities are working to minimize the spread of the virus in Indonesia, including its main tourist spot of Bali. After a volatile 2019, Warjiyo said the global environment remains challenging, especially for emerging markets such as Indonesia. He called for greater coordination between monetary and fiscal authorities to support growth.

US$1=Rp14,000

Written by Staff Editor, Email: theinsiderstories@gmail.com