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BI continues to intervene in markets as foreigners sell Indonesian securities

Jakarta Post - February 28, 2020

Adrian Wail Akhlas, Jakarta – Bank Indonesia (BI) has pumped Rp 87 trillion (US$6.2 billion) into the domestic bond markets so far this month as big sell-offs sent stock markets around the world into a tailspin amid fears over the global spread of the coronavirus.

As of Thursday, foreign investors had sold off Rp 26.2 trillion worth of government debt papers (SBN) throughout February, BI Governor Perry Warjiyo said on Friday. Foreigners had sold a net Rp 4.1 trillion worth of stocks over the same period, he added.

The benchmark Jakarta Composite Index (JCI) touched a low of 5,290 points at 10:55 a.m., a level unseen since December 2016 and down 4.4 percent from Thursday's close. That adds to a 2.69 percent plunge on Thursday. The rupiah had weakened by 1.08 percent to Rp 14,000 against the US dollar, Perry said.

The central bank governor said BI would continue to intervene to stabilize the bond market as well as the rupiah. BI had intervened in the spot market, the domestic non-deliverable forward (NDF) market and by buying SBN, he added.

"We have intervened by buying SBN as foreign investors post sell-offs. Of the Rp 100 trillion, [we spent] Rp 87 trillion since the end of January," Perry told reporters during a media briefing in Jakarta on Friday.

Perry said foreign investors' sell-offs occurred worldwide due to the coronavirus crisis, adding that Indonesia actually performed better than other countries in Asia.

"We are also coordinating with the Finance Ministry to stabilize the macroeconomy to mitigate the downside risks of the coronavirus crisis," he added.

As reported earlier, the central bank has slashed its benchmark interest rate by 25 basis points to 4.75 percent to encourage lending and boost economic growth, which has dropped to a four-year low level of 5.02 percent in 2019.

The government has also announced a Rp 10.3 trillion stimulus package that is expected to boost consumer spending and reinvigorate Indonesia's tourist industry, which has been hard hit by the deadly coronavirus.

Source: https://www.thejakartapost.com/news/2020/02/28/bi-continues-to-intervene-in-markets-as-foreigners-sell-indonesian-securities.html