BI drives firms to sell dollars<\/p>\n
JAKARTA (JP): Bank Indonesia, the central bank, introduced
\nyesterday a new foreign exchange trading facility for export-
\noriented companies in its latest move to shore up the falling
\nrupiah.<\/p>\n
Bank Indonesia Governor J. Soedradjad Djiwandono said the new
\nfacility included arrangements for swap and forward purchases.<\/p>\n
\"The swap facility is aimed at encouraging these exporters to
\nunload their dollar holdings,\" Soedradjad said after the
\nannouncement.<\/p>\n
The new swap facility allows export companies to buy dollars
\nthrough forward transactions with 11 foreign exchange banks,
\nappointed by Bank Indonesia. The appointed banks can then
\ncontinue the transaction with the central bank.<\/p>\n
At the same time, the export-oriented companies can also sell
\ntheir foreign exchange earnings through forward transactions with
\nBank Indonesia. Previously the foward transaction could be
\ncarried out only outside the central bank.<\/p>\n
The central bank governor did not say how effective the new
\nmove would be in stabilizing the rupiah but he said the new
\nfacility would protect exporters from the sharp fluctuation of
\nthe rupiah against the dollar and to ensure that they would get
\nthe dollars they need from the central bank.<\/p>\n
This would also guarantee that the export companies would not
\nlose their money from foreign exchange transactions should the
\nrupiah continue to drop against the dollar, Soedradjad said.<\/p>\n
He said the length of the facility would be adjusted to
\ndemand, and the premium rate of the swap or the forward trading
\nwould be based on the current market rates at the time of the
\ntransaction.<\/p>\n
The central bank governor said the new scheme involved 11
\nbanks, five of which are state-owned.<\/p>\n
Minister of Industry and Trade Tunky Ariwibowo said yesterday
\nthere were 580 registered export-oriented companies which were
\neligible for the forex trading facility.<\/p>\n
The minister said he was optimistic that the new facilities
\nwould help a smoother flow of funds for export and import related
\nactivities.<\/p>\n
\"Export companies need dollar as well as rupiah in their
\noperations, but what we see now is an imbalance in the supply and
\ndemand of the foreign exchange,\" he said.<\/p>\n
Many companies held their U.S. dollar holdings from their
\nexport revenue because they lacked the confidence that the rupiah
\nwould gain strength against the U.S. greenback again, he said.<\/p>\n
Tunky said he expected the supply and balance of the dollar in
\nthe market would balance out again, if the new scheme worked out.<\/p>\n
\"For these companies to hold their dollars is normal because
\nof the unpredictability of the rupiah in the market, but this new
\nfacility will hopefully give confidence to exporters to release
\ntheir dollar holdings,\" he said.<\/p>\n
The 580 export related companies, most of which operate in the
\ntextile industry, have been given favorable treatment including
\nlower interest rates on rediscount facilities.<\/p>\n
Bank Indonesia issued early last month a ruling limiting
\nforward forex trading by domestic banks to nonresident customers
\nto US$5 million in a bid to confine speculative dollar buying.<\/p>\n
But the move was unsuccessful as the rush for dollar
\ncontinued, with rupiah further losing ground.<\/p>\n
The rupiah plunged to a new historic low of 3,725 against the
\nAmerican dollar in midday trading yesterday before recovering to
\n3,395\/3,405 at close. The rupiah has lost about 50 percent of its
\nvalue against the American greenback since early July.<\/p>\n
Soedradjad said this week's plunge was partly due to the sharp
\nincrease in demand for dollar from local companies either to
\nfinance their offshore debts or imports. (das)<\/p>\n
APEC -- Page 12<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/bi-drives-firms-to-sell-dollars-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }