Indonesia’s Financial Markets and Monetary Policy Dynamics Amid the Covid-19 Pandemic

Eric Alexander Sugandi
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Eric Alexander Sugandi: Asian Development Bank Institute

No 1198, ADBI Working Papers from Asian Development Bank Institute

Abstract: We examine the impact of the COVID-19 pandemic on Indonesia’s financial markets and monetary policy dynamics. We explore five types of financial markets in Indonesia: (1) the Indonesian rupiah (IDR) interbank money market; (2) the US Dollar (USD) interbank money market; (3) government conventional bond (SUN) markets; (4) the stock market; and (5) the USD/IDR spot market. We examine Bank Indonesia's (BI) three types of monetary policy instrument: (1) BI seven-day reverse repo rate; (2) minimum reserve requirement ratios; and (3) BI’s monetary operations. We find that the COVID-19 pandemic causes different impacts of particular monetary policy instruments on Indonesia’s financial markets during the pandemic compared with those in the non-pandemic period.

Keywords: COVID-19; monetary policy; Indonesia’s financial markets; Bank Indonesia (search for similar items in EconPapers)
JEL-codes: E58 G10 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2020-11-16
New Economics Papers: this item is included in nep-cwa, nep-isf, nep-mac, nep-mon and nep-sea
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