Indonesia's central bank and Ministry of Finance are joining forces to increase the attractiveness of financial assets in the hope of attracting foreign capital back into the country, following a sharp depreciation of the rupiah and a more than 30% stock market crash.
June 6, 2569 at 12.21:XNUMX a.m., Reuters reported that Indonesia is moving forward with coordinating monetary and fiscal policies to attract foreign capital back into the country. The rupiah has weakened to a record low in recent weeks amid capital outflow pressure and investor concerns about the government's economic policy direction.
Mr. Perry Warjiyo, Governor of the Bank of Indonesia (BI). Following discussions with the Ministry of Finance, it was revealed that both agencies agreed to increase the attractiveness of returns on Indonesian financial assets in order to attract foreign capital back into the country's financial market.
Although the central bank governor has not yet revealed details of the measures, this move comes at a time when Southeast Asia's largest economy is facing significant pressure from capital outflows, resulting in the Indonesian stock market falling by more than 30% this year, while the rupiah continues to weaken.
Foreign investors have expressed concerns over President Prabowo Subianto's large-scale government spending plans, as well as the increased budgetary burden of energy subsidies resulting from the impact of the Iran-Iran conflict. Furthermore, the market is concerned about the independence of the central bank, the transparency of capital markets, and the government's plans to centralize the export of key commodities.
Recent data also indicates that foreign investors' holdings of Indonesian government bonds have fallen to their lowest level in nearly 20 years, reflecting weakening confidence in Indonesian assets.
Recently, the Bank of Indonesia has increased its intervention in the foreign exchange market to support the rupiah, while also purchasing long-term government bonds in the secondary market to maintain liquidity and reduce pressure on bond yields.
The Ministry of Finance implemented a repurchase program of government bonds in the market last month to prevent bond yields from rising too high, which would increase the government's borrowing costs.
The central bank governor also revealed that BI will increase the interest rate paid on government deposits held with the central bank to help reduce the government's interest burden and build confidence among credit rating agencies.
sideIndonesian Finance Minister Purbaya It was stated that this collaboration between fiscal and monetary policy would help restore investor confidence and stabilize the country's financial markets.
Earlier, Indonesia's central bank surprised the market by raising its policy interest rate by 0.50% at its May meeting, more than the market had anticipated, in order to protect the rupiah from global market pressures.
refer : reuters.com
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