Indonesia's central bank raises bond buying in September, official says

Jakarta, Indonesia - The nation's central bank, Bank Indonesia (BI), raised its bond purchases in the secondary market during September in an effort to increase liquidity, according to Erwin Gunawan Hutapea, the bank's head of monetary management. In the year ending September, BI had acquired nearly 300 trillion rupiah of government bonds, comprising short-term treasury bills in the primary market and longer-duration bonds in the secondary market.

Since July 21, when total purchases were 188.7 trillion rupiah, BI has spent over 110 trillion rupiah on government bonds. Hutapea stated that the bank's bond buying operation in September was part of its efforts to inject liquidity. Following the unexpected resignation of Governor Perry Warjiyo in late July, BI has not disclosed the volume of its bond purchases in policy statements published after monthly board meetings.

Typically, BI's currency interventions to support the rupiah are accompanied by bond buying to mitigate their impact on domestic rupiah liquidity. In an attempt to stabilize the rupiah's exchange rate, BI raised policy rates by 100 basis points between May and June, but has also committed to maintaining sufficient liquidity at home to safeguard economic growth.