Indonesia Takes Emergency Measures To Stop Capital Flight
March 3, 2020 (EIRNS)—Immediately after the first two cases of COVID-19 hit Indonesia on March 2, Bank Indonesia (BI) and the Indonesia Stock Exchange issued a number of emergency measures to stem the capital flight which was already undermining the value of the rupiah. The central bank lowered the reserve requirement ratio on U.S. dollars held by BI from 8% to 4%, and a smaller amount for the rupiah reserve requirement, increasing liquidity in the banking system by over $3 billion. BI also intervened in the forex market and bought over $7 billion in government bonds on the secondary market.
According to the Jakarta Post: “Last week, foreign investors sold a net Rp33.6 trillion ($2.36 billion) in both Indonesian stocks and bonds.... The stock market fell by 7.3% and the rupiah fell 4.1%, even before any COVID cases appeared in the country.”
The stock exchange halted all short sales.
All ASEAN countries are being hit by capital flight due to the spread of the coronavirus. The Philippines’ stock market fell 7.9% last week, followed by Indonesia (7.3%), Vietnam (5.5%), Singapore (5.3%) and Malaysia (3.2%).