Indonesia’s new central bank governor and finance minister pledged to align policies on liquidity and economic growth, signaling a more synchronized approach after disagreements between their predecessors rattled markets. Bank Indonesia Governor Destry Damayanti and Finance Minister Suahasil Nazara said they are coordinating on the nation’s financing plan for next year, including the issuance of government bonds and the central bank’s own securities, they said in their first joint briefing late Thursday. Both the government’s treasury bills and BI’s papers have similar short-dated maturities, Destry said in the briefing. “What we are doing is aligning the issuance of these two instruments so that they are in sync and there isn’t too large a gap in their yields.” Destry said the premiums on the central bank’s so-called SRBI securities have already declined to become more level with market expectations at each government bond auction.

The rupiah edged lower 0.1% to 17,919 per dollar in early trading Friday and was set for its worst week in over four months as capital outflows and elevated oil prices weighed on the currency. Stocks climbed 0.4% while the 5-year government bond yield rose 3 basis points to 6.99%, the highest in a week, amid a global bond selloff. The two debt instruments were one of the sources of friction between former BI Governor Perry Warjiyo and ex-Finance Minister Purbaya Yudhi Sadewa, who were both removed from their posts in recent weeks.

The central bank had offered juicy yields on the SRBI in a bid to lure foreign inflows that could strengthen the rupiah — its primary mandate. However, banks’ purchases of the securities also absorbed liquidity in the system, while dampening appetite for government bonds and pushing the state’s borrowing costs higher. “We see the bilateral meeting as a constructive signal of increasingly structured fiscal–monetary coordination, particularly as Indonesia needs to simultaneously support domestic activity and strengthen resilience against external shocks,” said Irman Faiz, chief economist at PT Bank Danamon in Jakarta. Better coordination on government bond and SRBI issuance, as well as other BI liquidity operations, could help smooth money-market conditions and avoid unnecessary spikes in funding costs, he said. “For markets, the most important development is the increasingly integrated approach toward liquidity management,” he said.

Policymakers are now more focused on the distribution and cost of funds, including the placement of the government’s cash reserves, known as SAL, which should help maintain liquidity in the banking system, he added. Beyond the financing strategies, Destry and Suahasil said they would coordinate on managing Indonesia’s interest rate structure to ensure smooth policy transmission. The finance ministry also urged public service agencies with large deposits not to be too aggressive in demanding high interest rates from banks. “Synergy does not mean influencing or offsetting one another, but rather moving together toward a common goal,” Destry said.

Suahasil added, “We will strengthen coordination and synergy, with a shared understanding that what matters most for the country is how to grow the real economy.”.