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Erick Thohir asks SOEs to issue global bonds to help shore up flagging rupiah
The rupiah slightly increased to 16,485 per US dollar on Tuesday afternoon after falling 3.85 percent to Rp 16,575 per dollar on Monday
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A currency trader holds US dollars at a foreign exchange outlet in Jakarta on March 19. (Antara/Indrianto Eko Suwarso)
T
he State-Owned Enterprises (SOEs) Ministry has asked large state-owned companies to issue bonds to help shore up the flagging rupiah, which has dropped sharply in recent days amid growing fears over the worsening of the economic outlook due to the COVID-19 pandemic.
Minister Erick Thohir said he had asked several state-owned firms with good ratings, such as Bank Mandiri and Bank Rakyat Indonesia (BRI), to seek funding through bond issuance to help strengthen the rupiah, which had sharply dropped in recent weeks amid worsening economic outlook.
“We only instructed state-owned firms with good ratings like Bank Mandiri, Bank Rakyat Indonesia [BRI] and Pertamina to issue the bonds,” he said during a teleconference with the media, without detailing the currency of the bonds.
The bonds issued by large local companies, especially major state-owned companies, usually attract foreign institutional buyers. The purchases by foreign investors have also help increase the country’s foreign exchange reserves.
The rupiah slightly strengthened to 16,485 per US dollar on Tuesday afternoon after falling 3.85 percent to Rp 16,575 per dollar on Monday. The rupiah, which has lost 19.54 percent of its value since the beginning of this year, is billed as the weakest currency in Asia.
Erick said the ministry was still in talks with state-owned companies on the size of the bonds that could be issued. Erick also said the timing of issuance should be carefully set, given growing uncertainty in the global economy.
Such a sentiment was echoed by Bank Mandiri treasury and international banking director Darmawan Junaidi, who said the bank continued to monitor the latest market developments to find the right time to realize its plan to issue global bonds worth US$1.25 billion
