Inflation Control and Financial Facilities Strategy
Bank Indonesia Policy Mix: March 2020
Mitigating the risk of COVID-19 transmission
B BANK INDONESIA
BANK SENTRAL REPUBLIK INDONESIA
To strengthen coordination and the various policy measures already taken, Bank Indonesia on
March 2nd 2020 introduced a variety of five follow-up policy measures to maintain monetary
and financial market stability as well as mitigate the COVID-19 risks
1) Intensify triple intervention policy to ensure rupiah exchange rates move in line with the currency's
fundamental value and market mechanisms. To that end, Bank Indonesia will optimize its intervention
strategy in the DNDF market, spot market and SBN market in order to minimize the risk of increasing rupiah
exchange rate volatility.
2) Lower the FX reserve requirements for commercial banks from 8% to 4%, effective 16th March 2020, which
will increase FX liquidity in the banking industry by around USD3.2 billion and simultaneously alleviate
foreign exchange market pressures.
3) Lower the rupiah reserve requirements by 50bps for banks financing export-import activity in coordination
with the Government. Effective from 1st April 2020 for a period of nine months before a further review, this
policy is expected to facilitate export-import activity through lower costs/fees.
4) Expand the range of underlying transactions available to foreign investors in order to provide alternative
hedging instruments against rupiah holdings.
5) Reaffirm that global investors can utilize global and domestic custodian banks to conduct investment
activity in Indonesia.
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