JAKARTA (TheInsiderStories) – Bank Indonesia (BI) officialy use global SUKUK as the underlying asset of SUKBI. This is stated in BI Regulation No.21/6/PBI/2019, concerning the Third Amendment to BI Regulation No.20/5/PBI/2018 concerning Monetary Operations.
This provision is carried out in order to strengthen monetary operations based on sharia principles. This regulation will be effective on April 29. Currently, the central bank has already had Global SUKUK as foreign reserves.
The Bank explained, there is also an improvement of the BI’ Sharia Deposit Facility contract, in accordance with the opinion of the National Sharia Council-Indonesian Ulema Council. Originally the instrument used the wadi’ah contract to become a ju’alah contract.
Beside that, BI also carried out another policy to boosting the domestic demand which are to increase availability of liquidity, encourage the retail payment efficiency, boost the supply of transactions for Domestic Non Deliverable Forward, developing the commercial securities market, an implementation of market operators, and encouraging expansion of electronification.
In addition, to maintain financial system stability, BI also strengthens macro prudential policies through loan to value policies, counter cyclical buffer, banking liquidity policies that are reviewed every 6 months. With this policy, it is expected to encourage growth in the financial sector with loan and deposits will grow 10-12 percent and 8-10 percent respectively.
In terms of exchange rates, BI’ Governor Perry Warjiyo revealed, the Rupiah would move stably with a maintained market mechanism. BI also sees inflation in a downward trend and its expected to reach the target of 3.5 percent plus minus 1 percent by the end of 2019.
“To maintain inflation, coordination is also strengthened ahead of fasting and Ramadhan,” he said at his office.
Foreign Capital Inflows
Bank Indonesia noted the foreign capital inflows to the Indonesian market reached Rp131.1 trillion or $9.2 billion until May 2. Its higher than the whole 2018, which only reached Rp57.1 trillion.
Warjiyo explained that the increase of foreign capital inflows showed a high level of investor confidence to the Indonesian market and attractive yields on state securities portfolios. He elaborated, Rp66.3 trillion of the funds goes into government bonds and Rp66.1 trillion that goes into the stock market.
He added, Rp51 trillion of Rp66.1 trillion come from the realization of investment in a bank. He said the banking acquisition affect positively to Indonesia’ stock market.
Warjiyo hoped, with the higher foreign inflows will bring a positive effect on the local currency. In the current position, $1 is equivalent to Rp14,275, or lower 0.21 percent compared to the closing trade position on Thursday (05/02).
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