BI books Rp 35.5t revenue from forex management<\/p>\n
JAKARTA (JP): Bank Indonesia booked some Rp 35.55 trillion in
\nrevenue from its foreign exchange management operation last year
\nincluding gains from intervention in the currency market to help
\nstabilize the ailing rupiah, according to the Supreme Audit
\nAgency (BPK) in its audit report on the central bank 2000
\nfinancial report.<\/p>\n
BPK said that Rp 20.66 trillion of the forex revenue was a
\nresult of exchange rate differential following the adoption of
\nthe net currency position (NCP), a forex management method, since
\nearly January.<\/p>\n
\"On December 31, 2000, Bank Indonesia has net assets in
\nforeign currency worth Rp 20.66 trillion equal to US$23.53
\nmillion,\" BPK said in the audit report, a copy of which was
\nobtained by The Jakarta Post over the weekend.<\/p>\n
Bank Indonesia holds a basket of hard currencies including the
\nU.S. dollar, Japanese yen, Germany's deutsche mark, and the euro.
\nForex transaction is reported in rupiah using the current
\nexchange rate level of the transaction date.<\/p>\n
The central bank claimed that it has sold its dollars
\nperiodically to help prop up the rupiah, which has been under
\nstrong pressure due to a combination of domestic political
\ninstability and economic woes. Bank Indonesia has never disclosed
\nthe amount of its market intervention measure. It is surprising
\nthat the central bank managed to make a profit from the
\nintervention measure. Many had thought that it was a losing
\noperation as the central bank had to sell its dollars at lower
\nrates in order to defend the rupiah.<\/p>\n
The exchange rate of the rupiah against the dollar in 2000
\naveraged at Rp 8,400 per dollar compared to the central bank's
\naverage assumption of Rp 7,000 per dollar when it made its
\ninflation forecast earlier in the year.<\/p>\n
The local currency started to tumble in April particularly in
\nthe run up to the annual session of the People's Consultative
\nAssembly, the country's top legislative body, and strong dollar
\ndemand for foreign debt repayment and amid the general weakening
\nof other currencies against the dollar.<\/p>\n
The rupiah is currently hovering at around Rp 11,450 per
\ndollar amid the country's leadership crisis as the embattled
\nPresident Abdurrahman Wahid faces growing pressure from the
\nlegislative body to step down.<\/p>\n
The gains from the forex management operation is the largest
\ncontributor to Bank Indonesia's 2000 revenue of around Rp 49.66
\ntrillion versus total spending of around Rp 22.46 trillion.<\/p>\n
BPK said that Bank Indonesia booked a surplus of around Rp
\n2.57 trillion during the year after taking into account the Rp
\n24.5 trillion cost resulting from mismanagement in the
\ndisbursement of emergency loans to ailing banks.<\/p>\n
The central bank on behalf of the government channeled around
\nRp 144.5 trillion in emergency loans into troubled banks between
\n1998 and 1999 to bailout the industry.<\/p>\n
The government was supposed to cover the cost, but after BPK
\nrevealed that much of the emergency loans were misused by the
\nrecipient banks, which were mostly owned by the cronies of former
\ndictator Soeharto, the government initially declined to do so.
\nFollowing intense negotiations, the government finally agreed
\nlate last year to cover around Rp 120 trillion of the cost, with
\nthe remaining Rp 24.5 trillion to be shouldered by Bank
\nIndonesia.<\/p>\n
But the burden sharing deal reached in November between the
\ngovernment and the independent Bank Indonesia has yet to be
\napproved by the House of Representatives.<\/p>\n
BPK gave a qualified opinion on the Bank Indonesia financial
\nreport.<\/p>\n
\"The report ... is already in line with generally accepted
\naccounting principles ...,\" the agency said.<\/p>\n
But BPK added that the burden sharing deal must be approved by
\nthe House to lend legal certainty to the arrangement.<\/p>\n
Meanwhile, on spending costs, the largest outlay of around Rp
\n11.91 trillion went to the implementation of the central bank's
\nmonetary policy.<\/p>\n
Bank Indonesia covers the interest rate of the central bank
\nSBI promissory notes issued to absorb excess liquidity in a bid
\nto curb inflationary pressure and also help defend the rupiah.<\/p>\n
The interest rate of the SBI notes in 2000 was less volatile
\ncompared to the level over the past few months of this year.<\/p>\n
Elsewhere, the Bank Indonesia 2000 financial report said that
\nthe central bank booked total assets of some Rp 580.32 trillion
\nas against a total liability of Rp 461.12 trillion.<\/p>\n
The largest asset was in the form of claims on the government
\ntotaling Rp 279.60 trillion, followed by rupiah and foreign
\ncurrency notes worth Rp 218.06 trillion.<\/p>\n
The central bank's largest liability was rupiah and foreign
\ncurrency obligations to international institutions including
\nforeign banks and the International Monetary Fund totaling Rp
\n105.13 trillion. (rei)<\/p>",
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