JAKARTA (TheInsiderStories) - Indonesia’s central bank has issued new regulations for repurchase agreements of rupiah-denominated bonds with banks for them to get Chinese yuan.
The move is part of the central bank’s push to get more transactions settled in currencies other than the US dollar to reduce the country’s dollar demand.
BI Governor Agus Martowardojo said earlier that BI will facilitate transactions with the rupiah and the yuan because it has the support of the People’s Bank of China under a bilateral swap agreement.
Under the new regulations uploaded to BI’s website on Friday (27/05), BI said a commercial bank can sell their sovereign bonds or BI’s notes and buy them again under a contract for at least 500,000 yuan or as needed by the underlying transactions.
The central bank said the transactions can take place through an auction with fixed rates, or through non-auction, with 1-, 3- or 6-month tenure. Banks can also use the yuan to finance international trade or foreign direct investment.
On Friday, BI also issued new regulations covering the procedure for swap transactions of currencies other than the US dollar.
Indonesia’s and China’s central banks last year increased their bilateral swap deal to $20 billion from $15 billion, which can be used for trade and direct investment financing, as well as for purposes mutually agreed by both banks. (*)