JAKARTA - The Ministry of Finance (Kemenkeu) has revealed that it has begun to take gradual intervention steps in the bond market to contain pressure on the rupiah exchange rate.
This effort is carried out through the purchase of State Securities (SBN) on a regular basis to maintain the stability of the financial market while attracting foreign investors to return to the domestic market.
Minister of Finance Purbaya Yudhi Sadewa emphasized that the rupiah condition is still within the safe limit after the government directly entered the bond market.
He explained that the government had prepared a state budget (APBN) of Rp. 2 trillion to be absorbed into the bond market. However, the realization of its use has only reached Rp. 600 billion because the number of investors who have released government bonds is still limited.
"Just yesterday I had targeted to absorb Rp2 Trillion, only Rp600 billion. This means that the sale is also a little bit. So we make sure that the bond price remains under control," he told the media, Tuesday, May 19.
According to him, the intervention using the state budget has begun since last week and currently the government is still monitoring the development of the rupiah's movement against the US dollar.
"From last Thursday a little, yesterday a little. Now I see what it's like," he said.
In maintaining the stability of the rupiah, Purbaya said the government has two main instruments, namely Cash Management and Framework.
For now, the government has only implemented the Cash Management scheme through budget management in the bond market.
Meanwhile, the implementation of the Framework requires the involvement of a number of other institutions, such as PT Sarana Multi Infrastruktur (PT SMI) which is under the Ministry of Finance, as well as other members of the Financial System Stability Committee (KSSK).
However, Purbaya assessed that the current bond market conditions are still quite under control so that the Bond Stabilization Framework scheme does not need to be implemented.
"If the Framework later I will call SMI and others to participate, but now it is not as bad as that, it is still relatively good," he explained.
Previously, Purbaya revealed that the government had prepared funds of around Rp2 trillion per day to maintain the stability of the rupiah.
"We have entered the bond market gradually. Foreigners have also entered, so hopefully in the future, these weeks will be more stable. I will enter the bond market every day," he told the media, Monday, May 18.
He added that the intervention fund came from the management of government cash which was still quite loose so that it could be used without disturbing the state budget needs.
"I ask for Rp 2 trillion every day," he said.
According to Purbaya, the stability of the bond market is very important to maintain foreign capital flows in Indonesia, with stable bond prices and yield reduction opportunities, investors are still potentially able to obtain capital gains so that the Indonesian debt market remains attractive.
He also ensured that the intervention could be carried out on an ongoing basis because the government still had a large cash reserve.
"I have Rp420 trillion in cash that I can turn around there, so it can be sustainable," he concluded.
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