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

ADBI Working Paper Series, No. 1198

28 Pages Posted: 19 Oct 2020 Last revised: 31 Dec 2022

Multiple version iconThere are 2 versions of this paper

Date Written: November 16, 2020

Abstract

This paper is based on a study that examines the impact of the Covid-19 pandemic on Indonesia’s financial markets and monetary policy dynamics. The study explores 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. It examines 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. The study finds that the Covid-19 pandemic causes different impacts of particular monetary policy instruments on Indonesia’s financial markets during the pandemic compared to those in the non-pandemic period.

Keywords: COVID-19, monetary policy, Indonesia’s financial markets, Bank Indonesia

JEL Classification: E58, G10

Suggested Citation

Sugandi, Eric Alexander, Indonesia’s Financial Markets and Monetary Policy Dynamics Amid the COVID-19 Pandemic (November 16, 2020). ADBI Working Paper Series, No. 1198, Available at SSRN: https://ssrn.com/abstract=3712776 or http://dx.doi.org/10.2139/ssrn.3712776

Eric Alexander Sugandi (Contact Author)

Asian Development Bank Institute ( email )

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