Bank Indonesia to Stabilize Rupiah Exchange Rate
Date 15 Agustus 2018
In a bid to support the Government’s steps to control current account (CAD) deficit by encouraging exports and reducing imports, Indonesias central bank Bank Indonesia (BI) will continue to prioritize its monetary policy to strengthen and maintain stability of Rupiah exchange rate.
BI Governor Perry Warjiyo said that the central bank, his side would continue the steps that have been carried out both in interest rate policies as well as from Rupiah exchange rate stabilization policies.
We will continue to carry out multiple interventions both on the foreign exchange market and the provision of Indonesias state securities (SBN) from the secondary market if necessary in the event of a reversal pressure, and it is our commitment to continue to maintain economic stability, especially the stability of Rupiah exchange rate, Perry told reporters after a Limited Cabinet Meeting at the Presidential Office, Jakarta, Tuesday (14/8).
According to Perry, BI also continued to carry out coordinative steps both with the Government and the Financial Service Authority (OJK) to strengthen the foreign exchange market.
Furthermore, BI had issued a number of policies to provide instruments for exporters, importers, and entrepreneurs will be able to conduct foreign exchange transactions, either through the sale of exporting swap forward or investment in Bank Indonesia instruments through foreign exchange deposits and Bank Indonesia Certificate (SBI) foreign exchange, he said.
Perry added that Bank Indonesia has now provided foreign exchange swaps at low prices. The first, for morning session, BI conducted foreign exchange swaps in order to manage liquidity. The tenor can be 1 month, 3 months, 6 months, or 12 months. We will auction it around 10:00 to 11:30 a.m. and announce it on 2 o’clock, he said.
In afternoon, Perry continued, BI also provides foreign currency swap hedging for corporations that have underlying transactions either from exports or from foreign exchange debt and other foreign exchange reserves.
They can swap it to the bank and the banks can re-swap it to Bank Indonesia with 3 months, 6 months or 12 months tenor. We are open from 2 p.m. to 4 p.m., Perry said, adding that BI offered not only the US Dollar as currency but also Euro, Japanese Yen, and Chinese Renminbi.
Perry also provided an example of a swap rate of foreign exchange with Bank Indonesia for 1 month now is 4.25 percent, while for 3 months now 4.75 percent or down from the previous 5.2 percent.
Therefore, he added, if the corporations have foreign exchange they can sell it on the spot or sell it swap at cheaper price.
In the meantime, for the corporations whose needs foreign exchange at some times in the future, according to Perry, there is no need to hunt for foreign exchange since the instruments exist.
We provide all of these instruments for corporations that need to contact related banks, Perry concluded, adding that BI also communicates with banks that will conduct transactions. (DNA/ES) (GWH/EP/Naster)