Antara, Jakarta – The Indonesian rupiah weakened against the US dollar at Thursday's close on October 22, falling 38 points, or 0.21 percent, to Rp18,060 per dollar from Rp18,022 in the previous session.

Permata Bank Chief Economist Josua Pardede said the rupiah's movement came as Bank Indonesia (BI) lowered banks' reserve requirements and extended its loan-to-value (LTV) and financing-to-value (FTV) policies.

"BI is continuing its macroprudential policies to support rupiah liquidity, including lowering the reserve requirement ratio and extending the LTV/FTV policies," Josua told state news agency Antara in Jakarta on Thursday.

BI lowered banks' reserve requirements by an average of 2 percentage points to strengthen rupiah liquidity in the banking system.

Specifically, the minimum reserve requirement for conventional commercial banks was reduced from 9 percent to 7 percent. For Islamic commercial banks and Islamic business units, the requirement fell from 7.5 percent to 5.5 percent.

However, BI's decision to maintain its benchmark interest rate at 5.75 percent limited the rupiah's movement, Josua said.

Government bond yields also declined across maturities following BI's decision to hold its benchmark rate. Yields on benchmark government bonds with five-, 10-, 15- and 20-year maturities stood at 7.21 percent, 7.43 percent, 7.42 percent and 7.41 percent, respectively, down one, two, one and two basis points.

Government bond trading volume reached Rp24.39 trillion on Wednesday, October 21, up from Rp15.71 trillion on Tuesday, October 20.

Foreign holdings of Indonesian government bonds fell by Rp2.37 trillion to Rp918 trillion as of October 20, accounting for 13.07 percent of total outstanding bonds.

BI's Jakarta Interbank Spot Dollar Rate (JISDOR), the central bank's reference exchange rate, also weakened on Thursday to Rp18,047 per US dollar from Rp17,986 previously.

Source: https://en.tempo.co/read/2122118/rupiah-falls-to-rp18060-per-dollar-despite-bi-liquidity-measure