Executive Director for Monetary Management at Bank Indonesia Nanang Hendarsyah said, the central bank intends to use Global SUKUK as an underlying for SUKBI or Sovereign Sukuk-Backed Securities - Photo: Special

JAKARTA (TheInsiderStories) – Bank Indonesia (BI) aimed to use Global SUKUK as an underlying for SUKBI or Sovereign Sukuk-Backed Securities, in order to deepen financial market and ensure financial stability, said the official today (02/18).

The reasoned, said Executive Director for Monetary Management at BI Nanang Hendarsah, causde Sharia bond has all of requirements as an underlying for SUKBI. However, he added, the purchase would be limited to top rated securities.

Currently, Hendarsah stated, the central bank has already had Global SUKUK as foreign reserves. Though, the official use of Global Sukuk will be waiting for an endorsement from National Shariah Board.

“We have some in our foreign reserves and we are waiting for an endorsement from the National Shariah Board to approve the plan to use them as underlying assets in Sukbi,” he told TheInsiderStories.

The Bank launched SUKBI in the end of December 2018 in order to absorb excess liquidity in sharia finance. The instrument has more flexibility than Reverse Repo Instrument because of tradable in secondary market.

SUKNI is also part of BI’ sharia bond portfolio with owning of asset underlying can not move to banking. Previously, the central bank only had Indonesia Islamic Bank Facilities, Sharia Bond Reverse Repo and Sharia Indonesia Bank Certificates as sharia monetary operation’ instruments. As second week of February 2019, the bank sold Rp 4 trillion (US$285.71 million) of seven and 14-day tenors in its latest auction.

On the other hand, on the last day of trade last week, Indonesian Rupiah declined by 0.16 percent to 14,094 over the greenback. Meanwhile, the Jakarta Composite Index fell by 0.48 percent to 6,389.08 with Rp286.76 billion foreign net sells.

Ahead of this week, BI will announce the 7-Day Reverse Repo rate and US Federal Open Market Committee will have meeting minutes, which give detailed insights of the monetary policy stance. Some of the Federal Reserves officials will also speak their views on the economy and its policy impact. Other than that, European Central Bank will publish account of the monetary policy meeting.

US$1: Rp14,000

Written by Staff Editor, Email: theinsiderstories@gmail.com