BI Governor Perry Warjiyo and BoJ's governor Haruhiko Kuroda Signed BSA in Bali (14/10) - Photo by Bank Indonesia

JAKARTA (TheInsiderStories) – Bank Indonesia (BI) and Bank of Japan (BoJ) signed Bilateral Swap Agreement to overcome the difficulties of short-term liquidity, marking their third extension since Feb. 17, 2003. The swap value remains up to US$22.76 billion or equivalent.

The agreement signed by BI’s governor Perry Warjiyo and governor of BoJ Haruhiko Kuroda in Nusa Dua Bali, on Sunday (14/10). The last amendment has been signed on March 4, 2018.

The current BSA agreement between Indonesia and Japan was agreed on Dec. 12, 2016 and will expire on Dec. 12, 2019. It said, by this new agreement, Indonesia can swap Rupiah to Japanese Yen, other than US Dollar.

According to Warjiyo, the agreement is expected to contribute to financial market stability amid global economic turmoil. It will also develop economic and trade relations between Indonesia and Japan.

BI, in coping with the downward pressure on the Rupiah, underlined in its last policy statement the potential risks to its outlook for inflation and the current account, indicating a high probability of monetary tightening.

The rise in the Fed fund rate and the steady of oil price rise do pose a double whammy for Indonesia in terms of current account deterioration and inflationary pressures because the country is a net oil importer.

BI’s Senior Deputy Governor Mirza Adityaswara has stated during IMF-WB Meeting in Bali, the commitment of Central Bank Governor and Finance Minister of G20 to continue financial cooperation through exchange of views on the latest global and regional economic developments, policy responses, and cooperation to strengthen economic resilience.

The meeting also emphasized the commitment to implement prudent macroeconomic policies, including policy mix with appropriate monetary, fiscal, macro-prudential and structural policies to promote strong, sustainable, balanced and inclusive growth while enhancing economic and financial resilience of the G20 members.

Indonesian Rupiah has entered its sixth day of losing streaks and foreign investors continued to pull out their fund from the stock market as risk-averse sentiments grew stronger due to the rise in yields of US treasuries.

Today, in the spot market, Rupiah closed down 23 points or 0.15 percent to 15,220 per US dollar. In fact, in trading on Friday (12/10), the local currency was able to rebound and end up appreciating 38 points or 0.25 percent to 15,197 against the greenback.

Besides with Japan, Indonesia also has signed the BSA with Singapore, Thailand, China and Australia.

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