JAKARTA (TheInsiderStories) – Financial Service Agency (FSA), Bank Indonesia (BI) and finance ministry will synergize various policies to provide stimulus and maintain public confidence in Indonesia’ financial market. The authority rated, the weakening of the Rupiah and the Jakarta Composite Index (JCI) in recent days is in line with the pressures of the coronavirus, which is increasingly widespread in various countries.
“OJK (FSA) will pay close attention to the development and dynamics of the global, regional and domestic stock markets. OJK will continue to coordinate with the Indonesia Stock Exchange to take the necessary steps in accordance with the authority, said the agency in an official statement released on Friday (02/28).
Last week, Indonesian Rupiah dropped significantly 4.06 percent to 14,318 and the middle rate of Bank Indonesia also weaken 3.32 percent to 14,234 against the US Dollar. In 10 trading days, the local currency has weakened 4.81 percent from Rp13,660 on Feb. 17.
The Jakarta Composite Index (JCI) also fell 2.69 percent to 5,452,704. The analyst rated, the external sentiment will still be the main weighting factor for both instruments on Monday. To support the market, FSA give a green light that issuers allowed to conduct share buyback without shareholders approval.
BI governor Perry Warjiyo, reported as of Feb. 27, total net foreign fund outflows amounted to Rp30.8 trillion (US$2.2 billion). He saw the condition of global financial markets are inflamed due to the virus outbreak and many global investors in all countries have withdrawn their investments.
Under these circumstances, he said, the central bank would continue to remain in the market to stabilize the market. He stated, “We carry out triple intervention in three aspects, namely spot, DNDF (Domestic Non Delivery Forward), and the purchase of government bond,” he told reportes on Friday.
In the same period, said the governor, there have been more than Rp100 trillion purchased from the secondary market. and pushed the yield of the 10-year government bond increased. “Before corona, it was around 6.56 percent, today it is 6.95 percent for the 10-year yield,” he adds.
While, finance minister Sri Mulyani Indrawati said, the cooperation and supervision must be increased in order to dealing with the global risks, especially to anticipate the impact of the coronavirus. She predicted the global economic growth to fall to 3 percent in this year.
China’ economic growth has also been revised down from the initial estimate of 6 percent. To address this situation, she emphasized the use of instruments in the form of the state budget, regional budgets and regional budgets. The government, said Indrawati, will also continue to ensure the economy continues to run well.
At the latest G-20 meeting in Riyadh, Saudi Arabia, the emergence of various global pressures, including the occurrence of COVID-19 pushed the G20 countries to increase cooperation. In this regard, Indonesia invites the G20 countries to continue to strengthen international cooperation and implement a policy mix to strengthen recovery and encourage global economic growth.
The G20 countries also agreed to strengthen monitoring of global risks, particularly those originating from the virus, and were encouraged to increase awareness of these potential risks and agreed to implement an effective policy mix response, both in monetary, fiscal and structural terms. In the midst of the moderate growth prospects for global economy, the potential risks are still relatively high, including geopolitical tensions, trade tension, and policy uncertainty.
Warjiyo supports the agenda of the Saudi Arabian G20 presidency regarding the development of the domestic capital market and underlines the importance of economic resilience as a foundation for the development of the domestic capital market. In addition, he also stressed the importance of increasing the base of domestic investors, mitigating the volatility of capital flows, and maintaining the integrity of the capital market to prevent fraud and maintain credibility.
by Linda Silaen, Email: email@example.com