Indonesia should manage central bank messages to keep investors' faith: S&P
[BENGALURU] The credibility of Indonesia's central bank with investors remains intact following parliamentary proposals to overhaul its mandate, but the changes must be carefully handled to prevent any pressure on its sovereign rating, S&P Global said on Friday.
"The communication and implementation of policy changes will be important determinants of BI's credibility going forward," Andrew Wood, the agency's sovereign debt analyst for the country, told Reuters.
"If investor confidence in Indonesia's monetary policy framework is negatively affected, it could give rise to financial market implications, potentially weakening monetary flexibility and sovereign rating support." Indonesian bonds, the rupiah and stocks have all been pressured this month on the back of recommendations made to the government that include giving ministers more influence in Bank Indonesia's (BI) policymaking.
In a bid to settle nerves after a series of interventions to support the currency, the bank on Thursday kept interest rates on hold and stressed both President Joko Widodo and Finance Minister Sri Mulyani Indrawati had pledged policy would remain independent.
REUTERS
KEYWORDS IN THIS ARTICLE
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Banking & Finance
UOB Q1 profit down 1.6% to S$1.5 billion
AI risks to financial stability are already a central bank worry
DBS CEO Piyush Gupta sells S$2.7 million worth of bank shares
Over S$646,000 spent to store, maintain, safeguard assets in money laundering case
Philippines eyes US$2 billion in its first global bond this year
UniCredit jumps past 60 billion euro market cap to join elite club