JAKARTA (TheInsiderStories) – Bank Indonesia (BI) will act quickly to maintain the stability of the rupiah exchange rate against the US dollar. These actions range from regular Domestic Non Deliverable Forward (DNDF), Term Repo and Forex Swap auctions, told TheInsiderStories, today (03/11).
Executive Director of Monetary Management Department BI Nanang Hendarsah explained that BI will maintain the stability of the rupiah exchange rate by holding regular DNDF auctions at 8:30 a.m local time.
“We will also remain in the market to maintain the spot rate stability. If capital flows out of state securities have the potential to trigger volatility in the rupiah exchange rate, BI will also enter the market to buy state securities,” he said.
In addition, Nanang told that in order to increase the availability of rupiah liquidity for banks, BI also held regular auction of expansion open market operation three times a week, namely through term repo and foreign exchange swap auctions.
“The auction schedule has been set in the next six months from March 21 until September 19, 2019, as can be seen on the Bank Indonesia website,” he added.
With a fixed schedule set for the next 6 months, it is expected to increase certainty in managing bank liquidity.
He explained, the total liquidity injection during 2018 was Rp345.5 trillion. While during January-February 2019 the total liquidity injection through the Repo Term was Rp76.5 trillion. While total rupiah liquidity injection through a forex swap auction during 2018, namely Rp243.33 trillion.
In the term repo auction, central bank expands liquidity to financing by guaranteeing collateral in the form of state securities or Bank Indonesia certificates, in the stipulated tenor.
Whereas in the forex swap auction, Bank Indonesia expands rupiah liquidity to banks, and receives foreign exchange on the first leg, and receives back Rupiah and submits foreign exchange on the second leg. The tenor swap are 1, 3, 6 and 12 months.
Meanwhile, today, at 12.00, the rupiah has started to strengthen 0.14 percent with $1 priced at Rp14,285. But at the opening of today, the rupiah exchange rate in the Jakarta Interbank Spot Dollar Rate weakened 0.71 percent to Rp14,324. This declining has occurred in the last 8 days with a weakening of 2.39 percent against the US dollar.
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