JAKARTA - Indonesia's central bank on Tuesday raised its benchmark target rate by three quarters of a percentage point to 9.5 percent and said it would increase banks' reserve requirements as it attempted to support the country's battered markets. Following are analysts' views on the policy moves.
This was largely expected, but it has come much later than it should have. What essentially started off as an excess liquidity problem and also an oil subsidy problem has blown out into a full-fleged confidence crisis. "The measures are coming late, but on balance they are probably just. Indonesia, as expected, has used both reserve requirements and interest rates hikes.
"What they might also do is to get exporters to bring their money back much quicker and dollar deposit rates have also been raised. Basically this means they want off shore dollars to come back. "This was a market in panic so these measures should help the rupiah in the short term. But Indonesia really needs to get Pertamina out of the onshore dollar market."