The central bank slashed its benchmark interest rate, the BI seven-day reverse repo rate, by 25 basis points to 4.50 percent after a cut of the same size last month.

It also announced measures to calm the market rout and stabilize the rupiah, which touched levels unseen since the 1998 crisis, including intensifying bond-buying in the secondary market and cutting banks’ reserve ratio.

“The monetary policy remains accommodative and consistent with the projected inflation rate and is a preemptive measure to maintain the momentum of domestic economic growth,” BI Governor Perry Warjiyo told a teleconferenced press briefing.

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BI also lowered its deposit facility rate to 3.75 percent and lending facility rate to 5.25 percent. The lower rates are expected to transmit into lower interest rates, affecting consumer loans, corporate loans and mortgage interest rates, as well as bond yields, among other instruments.

Indonesia on Wednesday announced 227 confirmed COVID-19 cases, with 19 deaths. Globally, the pneumonia-like illness has infected nearly 218,000 people and taken at least 8,800 lives. Several economists are already on alert for a potential recession as activities — from consumer purchases to factories production and shipments — slow down worldwide.

BI also revised down on Thursday Indonesia’s economic growth projection to between 4.2 percent and 4.6 percent this year, which would be the lowest levels since 2005. That compares with last month’s projection of between 5 and 5.4 percent.

“With the developing situation, we see that [the coronavirus] will continue to have a severe impact in April and May before we see a recovery in public health and the economy,” Perry said.

Read also: ‘Desperate times, desperate measures’: Calls grow for flexible state budget amid virus

He projected global economic growth to reach 2.5 percent this year, down from last month’s projection of 3 percent.

"Considering the global uncertainties caused by the massive spread of the virus, BI’s monetary easing is still needed to maintain economic stability," Bank Permata chief economist Josua Pardede told The Jakarta Post.

BI still has "ample room" to intervene despite limited ammunition caused by a weakening currency, he added.

"BI needs more accommodative policies to bolster the domestic economy amid a global economic slowdown but without compromising the rupiah’s stability."

Investors have pulled out around US$2.8 billion from Indonesia’s bond markets, and the Jakarta Composite Index (JCI) has plunged more than 30 percent since the beginning of this year, weakening the rupiah by 8.77 percent.

The currency continued its deep depreciation to 15,712 per US dollar, according to Bank Indonesia Jakarta Interspot Dollar Rate (JISDOR).

The last time it touched this level and reached 16,650 was in June 1998, after widespread rioting led to the downfall of former president Soeharto and ended his 32-year reign.

“The rupiah sell-off will likely limit BI’s ability to support the economy through further monetary easing,” Fitch Solutions said in a research note.

“Although BI has launched several lines of defense for the currency, including limiting short-selling in the stock market, intervening in the currency market and purchasing up to Rp 130 trillion worth of government securities, we expect that the central bank will increasingly struggle to defend the currency.

“With the number of [COVID-19] cases reported in Indonesia surging, we see investors remaining nervous about the archipelago's ability to contain the virus.”

BI pledges seven measures to calm the market rout and stabilize the rupiah:

1) Stepping up the intensity of its triple intervention efforts in the spot market, supplying domestic non-deliverable forwards and buying government bonds worth Rp 195 trillion.

2) Extending the tenor of sovereign debt papers (SBN) to 12 months and holding auctions every day without limits to ease banks’ liquidity, starting on Friday.

3) Adding the frequency of foreign exchange swaps with one- to 12-month tenors to every day — from three times a week — to ensure the availability of liquidity in the capital market.

4) Strengthening foreign exchange deposits to bolster banks’ financing.

5) Lowering the rupiah reserve requirement ratio by 50 bps for banks involved in financing small and middle businesses and other priority areas after a 50 bps cut last month to support trade activities.

6) Strengthening payment system policies to ensure money circulation.

7) Moving forward the starting date for foreign investors being able to use local bank accounts to keep their money to March 23 from the initial plan of April 1.