Bank Indonesia Expands Currency Swaps to Euro
Jakarta. Bank Indonesia, the country's central bank, this week will start euro hedging transactions with commercial banks to encourage diverse financing sources for the economy, it said in a statement on Monday (23/11).
The central bank will start using swaps for hedging on Wednesday, opening a two-hour window from 2 p.m. to 4 p.m. once a week.
Minimum transaction values will be 1 million euro and the tenors available will be for three and six months. Banks will be allowed to do non-dollar swap hedging with the central bank by stating their underlying transactions.
"Bank Indonesia's policy is expected to support diversified investment and international trade activities in many currencies," Bank Indonesia communications head Agusman said.
"It is expected that the transactions will help liquidity management and the maintenance of the rupiah exchange rate stability," Agusman said.
Bank Indonesia has been seeking to lower the economy's dependence on the dollar in trade. It intends to keep the domestic interest rate low to boost growth when the US Federal Reserve raises its interest rates.
In July, the central bank provided similar transactions for Japanese yen.
Early this month the monetary authority allowed exporters and importers to settle their transactions with Asean counterparts in their respective currencies.
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