Indonesia Lifts Asset Yields to Defend Rupiah as Stocks Slide 30% and Outflows Deepen
Updated
Updated · Reuters · Jun 6
Indonesia Lifts Asset Yields to Defend Rupiah as Stocks Slide 30% and Outflows Deepen
3 articles · Updated · Reuters · Jun 6
Summary
Bank Indonesia and the finance ministry agreed to raise yields on Indonesian assets to lure portfolio inflows back after the rupiah hit record lows in recent weeks.
Warjiyo gave no operational details, but the move marks a shift after both authorities had been trying to cap borrowing costs through bond purchases and buybacks.
7.25% was the weighted average yield at Friday's one-year SRBI auction, above the 10-year government bond yield of 6.902%, while foreign ownership of Indonesian bonds has fallen to a near two-decade low.
More than 30% has been wiped off Indonesia's stock market this year as investors fret over Prabowo Subianto's spending plans, ballooning fuel subsidies, central bank autonomy and commodity-export centralisation.
The agreement follows Bank Indonesia's larger-than-expected 50-basis-point rate hike in May, underscoring a broader push by fiscal and monetary authorities to restore investor confidence.