Indonesia needs to deepen its domestic financial market and have a smaller share of its debt owned by foreigners, its finance minister said on Wednesday, adding that economic fundamentals were broadly strong despite the rupiah's recent slump, reports Reuters.
The country's financial assets have been hit by a rout of emerging market assets and its currency hit 20-year lows with the vulnerability of Southeast Asia's biggest economy increased by worries about its current account deficit and need to import oil.
"We try to deepen our financial and bond market," Sri Mulyani Indrawati said at a World Economic Forum event in Hanoi.
"This is all the work that needs to be done in the more medium- to long-term," she said.
At present, the minister said, psychology sometimes weighs down the market and creates "reaction and response which is not really based on the fundamentals."
Foreigners hold about 37 per cent of Indonesian sovereign bonds.
Indrawati said Indonesia needs to see a lower percentage, which is linked to deepening its domestic bond market.
Indrawati said the current account deficit was lower than during other crises the country faced and that other economic indicators - such as corporate and household debt levels - were sound.
"If you look at the fundamentals, the indicator is not saying that you are reckless," said Indrawati.
Indonesia's current account deficit was 1.7 per cent of gross domestic product last year, but is expected to widen to around 2.5 per cent in 2018 as economic activity increases, the central bank has said.
Indonesia is raising import taxes on more than 1,000 goods ranging from cosmetics to cars, as part of measures aimed at cutting imports and supporting its currency.
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