The headquarters of the Bank Indonesia (Photo: https://www.thejakartapost.com/) Jakarta (VNA) – The Bank Indonesia (BI) has injected 503.8 trillion Rp (around 32.7 billion USD) into banks and the debt market to stabilise the rupiah and help support the government’s financing needs to combat the economic shocks of the COVID-19 pandemic.
BI Governor Perry Warjiyo said that banks would be obliged to buy government bonds after the central bank freed up 102 trillion Rp in liquidity. Starting on May 1, the reserve requirement ratio will be lowered by 200 basis points (bps) for commercial banks and 50 bps for sharia banks.
BI’s policy to revoke banks’ obligation to fulfil the Intermediary Macroprudential Ratio (RIM) would add another 15.8 trillion Rp of liquidity, said Perry.
This is in addition to the 386 trillion Rp worth of liquidity freed by the central bank since the beginning of the year to support the country’s crashing currency and boost banks’ liquidity, Perry said.
The central bank has bought 166.2 trillion Rp worth of government bonds in the secondary market as investors dumped Indonesian assets over fears about COVID-19, resulting in a slump in the value of the rupiah, which depreciated as much as 18.5 percent in early March.
The rupiah has started to gain against the greenback over the last few weeks, strengthening to 15,394 Rp per USD as per 11 a.m. on April 29 from this year’s low of 16,625 per US dollar, according to Bloomberg data./.
VNA
