The continued weakening of the rupiah and foreign fund outflows have a broader impact on banking as BI carried out many foreign exchange swap auctions to increase dollar.
BI’s increase of the seven-day reverse repo rate is expected to dampen rupiah depreciation, but there are doubts it will strengthen the rupiah, and instead will hoist loan interest.
Electronic money service providers must strengthen their capital. BI set minimum paid-in capital at Rp 3 billion and raised ongoing capital in line with increasing floating funds.
Moody’s is concerned about the withdrawal of foreign funds from the Indonesian market and the weakening rupiah, which narrow the government’s ability to obtain cheaper loans.
Some banks need fresh cash injections soon to cope with capital ratio declines and increases in non-performing loans.
The low number of buyers in government bond auctions shows Indonesia’s bond market is being shunned by foreign investors due to rising investment risks.
The weakening of the rupiah is not only having negative consequences for the economy, but also a domino effect that will undermine President Joko Widodo’s electability ahead of the 2019 election.
Foreign-backed e-payment systems are growing fast in number. Bank Indonesia has designed measures to protect customers and the local e-money industry.