Bank Indonesia to stabilize financial markets as spreading coronavirus trigger outflows

The bond market sent a recession signal on Thursday as China’s fast-spreading coronavirus reignited fears of an economic downturn. The yield on the benchmark 10-year Treasury note dipped four basis points to 1.546%, falling below the three month Treasury rate briefly, inverting part of the yield curve that the Federal Reserve watches closely. (CNBC)

The central bank stands ready to intervene in bonds, forex, and domestic non-deliverable forwards markets, according to Nanang Hendarsah, executive director of monetary management. Outflows at $563.7 million in bonds week-to-date as of Jan. 29, set for biggest weekly outflows since Aug. 2019, (Bloomberg)

Bank Indonesia is trying to stabilize financial markets as “unprecedented fears” over the spreading coronavirus trigger outflows, Governor Perry Warjiyo said. “So far what we have felt, and also other central banks are also feeling, is the impact of the coronavirus through the financial markets,” Warjiyo told Warjiyo said authorities are working to minimize the spread of the virus in Indonesia, including its main tourist spot of Bali. The effect on the real economy is so far limited, he said.

Source: Danareksa Sekuritas Debt Research
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