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Indonesia finance ministry says will work with BI to 'guard' govt bonds

Wednesday, August 12, 2015 - 17:03

[JAKARTA] Indonesia's finance minister said he would coordinate with the country's central bank, Bank Indonesia, to "guard" bonds amid economic turmoil that saw the rupiah tumble on Wednesday to its lowest level since 1998.

The yield on benchmark Indonesian 10-year bonds rose to 8.624 per cent on Wednesday, from 8.489 per cent a day earlier. "We will continue to guard government bonds. We will work with BI. The main thing is we will take action," Finance Minister Bambang Brodjonegoro told reporters.

The bond yield rose as the rupiah fell by nearly 2 per cent against the dollar to its lowest since July 1998 as China's devaluation hits the currency. Foreign investors hold 38 per cent of Indonesian government bond. "This China devaluation can make the Fed hesitate (to raise interest rates). If it increases the rate, (the dollar) will be even stronger against other currencies," Brodjonegoro said. "It will increase global uncertainties."

Earlier, central bank governor Agus Martowardojo said the rupiah's exchange rate has "overshot" and the Indonesian currency is currently undervalued. He said Bank Indonesia has been in the market and will maintain its presence there to guard the currency against volatility.

REUTERS

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