JAKARTA, June 6 (Reuters) – Indonesia’s central bank chief and finance minister on Saturday agreed to increase yields on Indonesian assets to attract portfolio inflows and support the rupiah, after \u200cthe currency hit record lows in the past few weeks.<\/p>\n
Bank Indonesia and the finance \u200cministry “will increase the attractiveness of yields” on Indonesian assets “so that portfolio inflows return” to the country, Governor Perry Warjiyo told a \u200bpress conference at parliament building.<\/p>\n
Warjiyo did not provide any details on the plan. He took questions but didn’t give any clearer answers.<\/p>\n
Southeast Asia’s largest economy has been hit by heavy capital outflows this year, with the stock market plunging more than 30% and the rupiah sinking amid investor concerns over President Prabowo Subianto’s \u200cbig spending plans, even as fuel \u2060subsidies balooned due to the Iran war.<\/p>\n
Foreign holdings of Indonesian bonds have slumped to a near two-decade low.<\/p>\n
Markets are also worried about the autonomy of the \u2060central bank, transparency issues at the stock market and Prabowo’s new plan to centralise exports of major commodities.<\/p>\n
BI has stepped up its currency interventions to defend the rupiah in foreign exchange markets, operations it has paired \u200bwith purchases \u200bof long-dated government bonds in the secondary market to \u200bmanage liquidity.<\/p>\n
The central bank’s bond buying operations \u200ctypically also aim to try to manage the government’s borrowing costs by preventing yields of long-term bonds from rising too much. The finance ministry had last month launched its own bond market operations, temporarily buying back bonds to keep yields from rising.<\/p>\n
It was unclear what impact Saturday’s agreement between the finance ministry with BI would have on monetary operations or the finance ministry’s bond auctions.<\/p>\n
One-year Bank Indonesia bonds, \u200ccalled SRBI, were sold at a 7.25% weighted average \u200byield at an auction on Friday, higher than the government’s \u200b10-year bond yield of 6.902%.<\/p>\n
To help the \u200bgovernment manage its interest expenses, Warjiyo said the central bank will raise the \u200crate it pays for cash the government keeps \u200bat BI, adding this \u200bshould ease any concern credit rating agencies may have.<\/p>\n
Finance Minister Purbaya told the conference, which was also attended by Prabowo’s spokesperson and deputy speaker of parliament, he hoped this synergy between \u200bfiscal and monetary authorities would improve \u200cinvestor trust.<\/p>\n
Indonesia’s central bank raised its policy interest rates by a larger-than-expected 50 basis \u200bpoints at a policy review in May to support the rupiah.<\/p>\n
(Reporting by Gayatri Suroyo, \u200bStanley Widianto and Stefanno Sulaiman; Editing by Kim Coghill)<\/p>\n","protected":false},"excerpt":{"rendered":"JAKARTA, June 6 (Reuters) – Indonesia’s central bank chief and finance minister on Saturday agreed to increase yields…\n","protected":false},"author":2,"featured_media":719609,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,96379,99,9567,164,134397,6225,16772,4805,348866,100780,49944],"class_list":["post-719608","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-bank-indonesia","tag-business","tag-central-bank","tag-economy","tag-finance-minister","tag-finance-ministry","tag-government-bonds","tag-indonesia","tag-market-operations","tag-perry-warjiyo","tag-prabowo-subianto"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/719608","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=719608"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/719608\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/719609"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=719608"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=719608"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=719608"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}