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Exclusive: Indonesia should manage central bank messages to keep investors' faith - S&P

Economy Sep 18, 2020 05:42AM ET
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8/8 © Reuters. People wearing protective masks, following the coronavirus disease (COVID-19) outbreak, are reflected on a screen showing stock prices outside a brokerage in Tokyo 2/8

(Reuters) - 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 (JKSE) 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. [nL4N2G019U]

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.

Exclusive: Indonesia should manage central bank messages to keep investors' faith - S&P
 

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Gilbert Start boy May 08, 2022 12:30PM ET
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