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Indonesia c.bank intervenes in FX, bond markets amid capital outflows

Senin, 24 Februari 2020 / 11:45 WIB
Indonesia c.bank intervenes in FX, bond markets amid capital outflows
ILUSTRASI. Indonesia c.bank intervenes in FX, bond markets amid capital outflows

Sumber: Reuters | Editor: Yudho Winarto

KONTAN.CO.ID - JAKARTA. Indonesia's central bank has intervened in the spot currency, domestic non-deliverable forward (DNDF) and bond markets amid outflows related to fears of the spread of COVID-19 in South Korea, an official told Reuters on Monday.

The rupiah fell by 0.9% as of 0331 GMT, the weakest since Jan. 8 and the biggest intraday fall in nearly a year. The main stock index fell more than 1%, while yields of government bonds with 1 year- and 3 year-tenure rose.

"There are outflows in the bond (market) and banks are short covering," Nanang Hendarsah, Bank Indonesia's head of monetary management said by text message.

"Because of the jump in virus cases in Korea during the weekend. It's to do with flight to quality away from EM assets," he added, referring to emerging markets.

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A trader in Jakarta said BI was "being aggressive" intervening in the bond and DNDF markets, but liquidity in spot FX trading remained "a bit difficult".

A surge of infections in South Korea and Italy, and an alarming rise in the death toll in Iran over the weekend, triggered steep falls in Asian share markets and Wall Street stock futures on Monday as investors fled to safe havens.

BI cut interest rates last week to ward off the impact of the coronavirus epidemic on the domestic economy, a fifth cut since May 2019.

Governor Perry Warjiyo said after announcing the rate cut BI was committed to stabilising the rupiah exchange rate in the market.

BI had bought a net total of 61.5 trillion rupiah ($4.43 billion) of sovereign bonds to stabilise yields, 27 trillion rupiah of which was made during capital outflows related to coronavirus fears earlier this month, the governor said on Thursday.