JAKARTA (TheInsiderStories) – Bank Indonesia (BI) has plan to lowered the foreign exchange (FX) swap transaction fee to hold the U.S dollar stayed in the country. Recently, President Joko Widodo has said to chasing U.S dollars through policy mix to keep a widening current-account deficit (CAD).
Coordinating Minister for Economic Affairs Darmin Nasution told reporters on Tuesday (31/07), of the 100 percent export revenues, only 85 percent are reentered the country. Therefore, he said, the government racked the brain for foreign exchange can be taken home and converted to rupiah maximally.
The central bank rolled out the FX swap for the first time in 2013 to strengthen the financial market and U.S dollar supply in the country and to anticipated of increasing external risks for the Rupiah in 2014. BI begun the FX swap transactions with tenors of three, six and 12 months.
The combination of capital outflows and Indonesia’s high current-account deficit has made the Rupiah Asia’s worst-performing currency in this year, having depreciated around 9 percent since early January.
President Widodo emphasized high global economic uncertainty needs to be anticipated as it may disrupt the sustainability of economic growth. Therefore, it is necessary to improve the current account balance through the improvement of export-based products and import substitution, including the tourism sector.
He ordered ministers, officials and central bankers on July 26 to step up efforts to lure more foreign visitors into the pristine sand beaches dotting hundreds of islands across the archipelago. He also asked provincial chiefs to expedite tourism and exports-related investments to address the twin deficits of current-account and trade.
“The trade balance, which I have mentioned many times, is a matter of export and import, we are deficit, there are fewer exports, the problem is in investment, in business expansion,” he said.
The President also said that at the center there is an integrated licensing system in the form of Online Single Submission (OSS). Later, the President continued, this OSS can be applied also in the region.
Based on government data, foreign investors have pulled out a net $3.8 billion from bonds and stocks this year as the rupiah weakened. The CAD is seen widening to about $25 billion this year, or about 3 percent of the gross domestic product, according to BI Governor Perry Warjiyo. That would be the highest shortfall since 2014, according to central bank data.
In the first half of 2018, the country posted a trade deficit of $1.02 billion after recording surplus for three years in a row.