Bank Indonesia intervened in spot foreign currency trading as well as domestic non-deliverable forward and bond markets on Monday to stabilize the rupiah, an official said, as the currency fell 0.5 percent to the weakest since mid-January.
“BI is making sure of rupiah’s stability,” Nanang Hendarsah, the central bank’s head of monetary management, told Reuters by text message.
“BI is boldly buying bonds in the secondary market and is offering DNDF (domestic non-deliverable forwards) through eight brokers,” he said, adding that intervention was also done in a measured way in the spot foreign exchange (FX) market.
Hendarsah attributed the rupiah’s fall in early trade to a drop in China’s equities market, which plunged after reopening from a 10-day Lunar New Year holiday amid a rapidly spreading virus epidemic.
The Chinese yuan and commodities markets in Shanghai slumped on Monday, on fears the coronavirus epidemic will hit demand in the world’s second-largest economy. The death toll in China rose to 361 as of Sunday with the number of confirmed cases rising to more than 17,200.
The rupiah fell as much as 0.5 percent to 13,725 per dollar by 0442 GMT. So far this year, it has gained 1.1 percent helped by big inflows.
Indonesia is one of Asia’s higher-yielding markets and has attracted heavy overseas inflows into its bond markets as investors sought better returns in a world of plunging interest rates.