Stimulus From Bank Indonesia Brings Rupiah To Strengthen This Monday Afternoon

Illustration. (Photo: Bank Indonesia)

JAKARTA - In contrast to the Composite Stock Price Index (IHSG) which was still closed in the red zone, the rupiah closed higher at the close of trading Monday, March 2. The rupiah exchange rate successfully reversed 53 points or 0.37 percent to a level of Rp14,265 per US dollar.

"The strengthening of the rupiah amid the outbreak of the corona virus in Indonesia, was due to Bank Indonesia providing the stimulus," said Head of Research at Monex Investindo Futures, Ariston Tjendra, to VOI.

In today's press conference, BI Governor Perry Warjiyo implemented several monetary policies to reduce the impact of the corona virus on the economy.

Governor Perry said there were five policy steps taken after holding the Board of Governors' Meeting (RDG) today.

"BI increases the intervention intensity in the financial market or triple intervention," said Perry citing the first point.

Then the second, Perry said, the central bank lowered the statutory reserve requirement (GWM) for commercial banks. "From 8 percent to 4 percent of Third Party Funds (DPK)," Perry said as quoted from cnbcindonesia.

As for the third, BI lowered the GWM for rupiah by 50 bps which took effect on April 1, 2020 for 9 months. "The reserve requirement is to make it easier for banks to finance exports and imports," said Perry.

Fourth, BI is expanding the scope of underlying transactions for foreign investors in hedging. "This includes DNDF. For foreign investors who sell or release SBN and put it into rupiah accounts in Indonesia, it can be used as an underlying to buy Domestic Non Delivery Forward (DNDF)," said Perry.

As for the fifth, BI emphasized that global investors can use custody banks both global and domestic for investment activities in Indonesia.

"We emphasize that all global investors can use global and domestic custody banks in investing," said Perry.