Indonesia' foreign exchange reserves rose to US$135.1 billion in July 2020 from previous month stood at $131.7 billion, the central bank reported today (08/07) - Photo: Special

JAKARTA (TheInsiderStories) – President Joko Widodo ordered Bank Indonesia (BI), Financial Service Agency (FSA), and Indonesia Deposit Insurace (IDX) creates a policy coordination to strengthened the financial market, ensure availability of liquidity in the market, and monitor the market conditions closely. Since early March, the COVID-19 has give a big pressures to the domestic market. 

“I ask BI to maintain the stability of the Rupiah and accelerate the use of the Rupiah in the country,” said the head of state in a limited meeting on monetary and fiscal policy policies amid the pandemic topic today (03/20).

Yesterday, BI’ governor, Perry Warjiyo, said during 2020, the central bank spent almost Rp195 trillion (US$12.58 billion) to intervened the financial market and to maintain the Rupiah stability. The purchase was carried out in spot markets and Domestic No Deliverable Forwards or DNDF.

“We, as all countries, have to face the fact that global investors are selling their assets—both stocks and bond. Now, cash is the king. This is not a fundamental problem, not an economic problem, but because of panic selling,” he stated. 

Warjiyo assured, the central bank continues to guard the financial market with triple interventions. Ha also promised to maintains the coordination very closely with the ministry of finance, FSA, and IDC to mitigate the impact of COVID-19 on the financial system.

The central bank also promised will hold an update regularly. He conveyed, “We schedule every Tuesday and Thursday at 14.00 p.m for domestic investors and for global investors today.”

On Thursday, BI cut its seven day reverse repo rate by 25 basis points to from last month 4.75 percent. The policymakers also reduce the deposit facility interest rate and lending facility rate by 25 basis points to 3.75 percent and 5.25 percent, respectively.

According to Warjiyo, the decision has been take to curb the domestic economy from COVID-19 outbreak. Amid the pandemic, the central bank also revised down global economic growth to 2.3 percent with risks downward. In 2021 the global economy will increase 3.7 percent from the initial estimate of 3.4 percent.

The policymaker also cuts Indonesian GDP from 5.0 – 5.2 percent to 4.2 – 4.6 percent and in 2021 5.2 – 5.6 percent will be driven by the fiscal side, improvement of the investment climate and BI effort. While, current account deficit 2020 and 2021 are respectively in the range of 2.2 – 2.5 percent of GDP. And, inflation is estimating stood at 2.98 percent year on year from January 2020 at 2.6 percent.

In the first session of today’ trading, Indonesian Rupiah touched the lowest level since 2013 at 16,040 against the US Dollar or dropped 0.88 percent compared to yesterday. While, the Jakarta Composite Index plunged 1.72 percent to 4,034.99.

US$1: Rp15,500

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