Indonesia Finance Minister Sri Mulyani Indrawati said on Tuesday that authorities prepare to use all the measures they implemented during the 2008 global financial crisis to stabilize financial markets. The options include buying back government bonds.
Indonesia’s high yielding assets are among the most attractive in emerging markets.
But with foreigners, it is accounting for around 38% of holdings in government bonds, they are vulnerable to outflows.
The minister said the recent dive in global markets due to plunging oil prices. Coronavirus fears had been “extraordinary”. The government will move to prevent it from hurting Indonesia’s economy.
Indonesia’s main stock index on Monday posted its biggest single-day drop since 2011 amid a global sell-off. It brought the year-to-date decline to 18.5% and triggered market measures by the Financial Service Authority and the Indonesia Stock Exchange.
The exchange, starting Tuesday, will stop stock price declines at 10%, compared with a previous range of 20%-35%.
The Financial Services Authority will allow companies to buy back shares without shareholder approval. It supports the economy to stabilize markets.
The main stock index on Tuesday clawed back some of its losses as Asian markets stabilized. It gained 2.3% by the midday break, while the rupiah rose 0.5%.
Twelve listed state companies are planning to buy back up to $560 million of shares following the measure, a State-Owned Enterprises Ministry official said.
Meanwhile, Indrawati said the government will continue to monitor. Whether or not there is a need for more support should the spread of coronavirus be prolonged.
Indonesia late last month unveiled a near $750 million stimulus package to battle the impact of the virus outbreak on the economy.