(Insider Stories) - Indonesian central bank is preparing regulations to boost the number of foreign exchange instruments to help deepen domestic financial markets and create a more liquid currency market.

Bank Indonesia Governor Agus Martowardojo said last week that an ideal currency market should have a combination of swap, repo, and forward transactions on top of the spot transaction, currently the highly common form in Indonesia.

Bank Indonesia in July introduced an auction for foreign exchange swap as part of its efforts to create more domestic instruments and to help hedge currency swing risks.

“When I joined Bank Indonesia (in late May), the interbank foreign exchange transactions were limited. I am delighted that since the third week of July, that transaction has becoming more active. I want to see higher volumes in the future,” said Martowardojo.