Home / Knowledge / News / Textiles / Bank Indonesia's rupiah exchange rate stabilisation policy
Bank Indonesia's rupiah exchange rate stabilisation policy
03
Oct '15
Bank Indonesia issued a rupiah exchange rate stabilisation policy package on September 30, 2015 as a follow-up to the previous policy package, dated September 9, 2015. The follow-up policy package focuses on three pillars - maintaining rupiah exchange rate stability; strengthening rupiah liquidity management; and strengthening foreign exchange supply and demand management, the Bank said in a press release.

Policy synergy between Bank Indonesia and the Government through this second September Policy Package is expected to strengthen macroeconomic stability and the structure of the Indonesian economy, including the financial sector, thus bolstering resilience.

The presence of Bank Indonesia on the domestic foreign exchange market to stabilise the rupiah exchange rate was strengthened through intervention on the forward market. In addition to intervention on the spot market, Bank Indonesia also intervenes on the forward market to help balance supply and demand. Maintaining balance on the forward market is important to alleviate pressures on the spot market.

Bank Indonesia reinforced rupiah liquidity management by releasing three-month Bank Indonesia Certificates of Deposit (SDBI) along with two-week reverse repo tradeable government securities (SBN). The release of such open market operation instruments will absorb liquidity, prompting a shift towards longer tenor instruments, which should reduce the risk of excessive use of rupiah liquidity that could intensify pressures on the rupiah exchange rate.

Foreign exchange supply and demand management was strengthened through a variety of policies that aim to boost supply and control demand.

First, the policy to manage supply and demand on the forward market was strengthened. The policy aims to encourage forward selling transactions of foreign currencies/rupiah and clarify underlying forward buys of foreign currencies/rupiah by raising the forward selling threshold that requires an underlying document from $1 million to $5 million per transaction per customer and broaden the scope of underlying assets for forward sells to include domestic and offshore foreign currency term deposits.

Second, foreign currency Bank Indonesia securities (SBBI) were also issued to back financial market deepening efforts, especially on the foreign exchange market.

Third, the holding period of Bank Indonesia Certificates (SBI) was reduced from one month to one week on order to attract foreign capital inflows.

Fourth, an incentive was provided in the form of a reduction in the interest tax paid on term deposits for exporters depositing their foreign exchange earnings at banks in Indonesia or converting the proceeds into rupiah as requested by the government. The policy is expected to keep foreign exchange earnings in the country for a longer period.

Must ReadView All

Textiles | On 17th Jan 2017

GST rollout from July 1; states to control small taxpayers

The Centre and states have reached a consensus on the issue of dual...

Textiles | On 17th Jan 2017

Reliance Industries net increases 3.6% in Q3FY17

In the three months ended December 31, 2016, India’s biggest private...

Textiles | On 17th Jan 2017

IMF projects advanced economies to grow at 1.9% in 2017

Advanced economies are projected to grow by 1.9 per cent in 2017 and...

Interviews View All

Riddhika Shah
SS Homme

'Worsted wool is the ideal fabric for menswear'

Claudia Kersten
Global Organic Textile Standard

‘GOTS is a very efficient supply chain management tool, especially for...

Marazban F Velati
Sutlej Textiles & Industries limited

No training can be effective till the candidate believes in it.

Eamonn Tighe
Nature Works LLC

Eamonn Tighe, Fibres and Nonwovens - Business Development Manager of...

Marcel Alberts
Eurofibers

Coating at a fibre level is a practice not usually seen in the...

Mark Paterson
Technical Absorbents Ltd

Mark Paterson, R&D manager of Technical Absorbents Ltd talks about Super...

Karan Arora
Karan Arora

Bridal couture created with rich Indian heritage, exquisite craftsmanship...

Bani Batra

Bani Batra’s couture wedding collection is inspired by traditional Indian...

Jay Ramrakhiani
Occasions Elegance Wear

It is believed that by early 19th century, Varanasi weavers had moved away ...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH
January 2017

January 2017

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

SUBSCRIBE


Browse Our Archives

GO


eNEWS
Insights
Subscribe today and get the latest News update in your mail box.
Advanced Search