March 02, 2020: The Indonesian central bank, Bank Indonesia, has edged down the minimum reserve requirement for banks and vowed to boost intervention in the financial markets in a bid to shore up the rupiah against the greenback.
The move came as the rupiah has depreciated about 7.2 percent against the U.S. dollar this year amid sluggish global economic growth.
Bank Indonesia ratcheted down the minimum reserve requirement for foreign currencies to 4 percent from 8 percent, Governor of Bank Indonesia Perry Warjiyo said on Monday.
The deduction of the requirement will take effect on March 16 and is expected to edge up the banking liquidity by up to 3.2 billion U.S. dollars, Warjiyo noted.
“We hope that the reduction of the minimum reserve requirement for foreign currencies can make rupiah appreciated,” he said at the lender's headquarters.
Warjiyo pointed out that the lender would also maximize its market-intervention strategy to help stabilize the Indonesian currency.
Bank Indonesia has aimed at helping accelerate the country's flagging economic growth by applying a stimulus on the economy, which is supported by a benign inflation and a dovish signal from the U.S. Federal Reserve.
Last month, the lender started applying a loosening policy after a three-month neutral stance.The Central Agency of Statistics on Monday announced that the annualized inflation in February accelerated by 2.98 percent, still in Bank Indonesia's target range of 2 to 4 percent.
Southeast Asia's biggest economy grew by 4.97 percent in the final quarter last year, down from 5.18 percent in the same period of the previous year.
