Indonesia

A surprise rate increase by Indonesia’s central bank underlines expectations that the start of monetary policy easing is looking increasingly far off for many Asian central banks, if it is on the horizon at all, the Wall Street Journal reported. As the U.S. Federal Reserve holds off on its own rate cuts and Asian currencies come under pressure, central banks in Asia face a dilemma. Lowering before the Fed does risks adding pressure to already-weak Asian currencies, pushing up prices of imported goods and services and sending inflation rates higher.

Indonesia said fiscal and monetary policies are in sync to cushion the economy from the rising dollar, demonstrating an all-hands-on-deck approach, with the central bank signaling they’re intervening more actively to aid the rupiah, Bloomberg News reported. “We work very closely with Governor Perry in order for us to be able to adjust the macro stance to adapt with this new level of pressure,” Finance Minister Sri Mulyani Indrawati said in a Bloomberg Television interview on Thursday, referring to Bank Indonesia’s top policymaker.

State builder PT Wijaya Karya clinched an agreement with some of Indonesia’s biggest banks to restructure 20.58 trillion rupiah ($1.31 billion) of debt, after the government’s infrastructure push saddled it with an unmanageable pile of liabilities, Bloomberg News reported. The state-owned construction company said it signed the deal with 11 institutions, including PT Bank Mandiri, PT Bank Negara Indonesia, PT Bank Rakyat Indonesia, PT Bank Tabungan Negara, PT Bank Syariah Indonesia and PT Bank Panin.

Indonesia sold $2 billion in the form of a US-currency sukuk, its first such issuance in 18 months against the backdrop of a global rise in borrowing costs, Bloomberg News reported. Southeast Asia’s largest economy issued $1 billion of five-year Sharia-compliant notes for general financing, according to a person familiar with the matter, who asked not to be identified as they are not authorized to speak about it. It also launched $1 billion worth of 10-year green notes for expenditure as outlined under its sustainable securities framework.

The Indonesian rupiah just had the worst quarter in more than a year, and analysts see more losses ahead, Bloomberg News reported. The currency broke the closely watched 15,400 level last week, and there is a possibility it may test this year’s low of 15,638, according to Malayan Banking Berhad. Higher crude prices threaten to worsen the net oil-importing nation’s finances, and that along with higher US yields and a stronger dollar are likely to weigh down the rupiah.

Indonesia’s central bank tapped tools other than interest rates to help the rupiah weather an emerging-market selloff triggered by the prospect of tighter US monetary policy, Bloomberg News reported. Bank Indonesia Thursday kept the benchmark seven-day reverse repurchase rate at a four-year high of 5.75%. While the decision was widely expected, Governor Perry Warjiyo announced a new tool to attract foreign funds to support the local currency. The decision came as data compiled by Bloomberg showed investors sold $127 million worth of Indonesian bonds so far this August.

The Indonesian government is reviewing a plan to merge state-owned airlines Garuda Indonesia and Pelita Air, a unit of energy firm Pertamina, to ensure affordable airfares, an executive said on Tuesday, Reuters reported. The plan came a year after Garuda reached an agreement with its creditors to restructure its $9 billion debt.

Distressed state construction company PT Waskita Karya of Indonesia said it won’t be able to deposit funds for the payment of interest and the repayment of principal for its rupiah bonds due Aug. 6, according to a filing on Friday, Bloomberg News reported. The rupiah-denominated notes of the heavily indebted builder has total outstanding of 135.5 billion rupiah ($8.9 million), according to data compiled by Bloomberg. The failure to make payments came after the company also missed a coupon payment due May 30, Waskita said in a statement.

Indonesia is drawing on the structure of the stock market to revamp crypto trading and mitigate the risks exposed by the collapse of the FTX digital-asset exchange, Bloomberg News reported. A key plank of the plan is a proposed state-backed crypto bourse where private-sector platforms will execute trades, according to the Commodity Futures Trading Regulatory Agency, which currently oversees digital assets. “The hard part is we can’t find a benchmark for such a crypto bourse,” the agency’s head Noordiatmoko said in an interview.