Tight money policy causes banks to raise rates<\/p>\n
JAKARTA (JP): Most commercial banks are increasing their one-
\nmonth time deposit rates to over 30 percent to draw more
\nliquidity from the public to survive the current tight money
\npolicy.<\/p>\n
A foreign exchange bank dealer said yesterday that starting
\ntoday state banks would start increasing their on-counter, one-
\nmonth deposit rates to 30 percent, two-to-three-months to 28
\npercent, and six-to-12-months to 19 percent.<\/p>\n
\"Private banks usually raise their deposit rates by one or two
\npercentage points higher than state banks in order to remain
\ncompetitive,\" the dealer said.<\/p>\n
He said the rate increase was normal following Bank
\nIndonesia's (the central bank) move Tuesday to raise one-week-to-
\nthree month bilateral Bank Indonesia Certificates (SBI) to soak
\nup excess liquidity in the market.<\/p>\n
Bank Indonesia raised one-week SBI rates to 20 percent from
\n10.5 percent, two-weeks to 22 percent from 11 percent, one-month
\nto 30 percent from 11.625 percent and three-months to 28 percent
\nfrom 11 percent.<\/p>\n
Publicly listed Bank Rama president Putu Antara, who is also
\nchairman of the Bankers Club Indonesia, said, \"as Bank Indonesia
\nhas increased interest rates, private commercial banks will
\nfollow suit automatically\".<\/p>\n
He said the most common practice among private banks was to
\nincrease time deposit rates by three percentage points above SBI
\nrates.<\/p>\n
Besides the SBI rates, Putu said private banks would determine
\ntheir rate increase according to the market's prevailing rates.<\/p>\n
\"If several banks increase their rates to 30 percent, other
\nbanks will definitely follow suit,\" Putu told The Jakarta Post.<\/p>\n
Putu agreed the tight monetary policy was necessary to prevent
\nthe rupiah from further declining against the American greenback.<\/p>\n
\"The central bank has made a wise move,\" he said.<\/p>\n
But Putu warned that the immediate impact of the tight
\nmonetary policy was the increase in lending rates imposed by most
\nbanks.<\/p>\n
As of yesterday, most commercial banks had already increased
\ntheir on-counter deposit rates. Large banks increased their rates
\nby a smaller percentage point than small banks.<\/p>\n
State-owned Bank Dagang Negara, for example, increased one-to-
\nthree-month deposit rates to 20 percent, six-month to 14 percent
\nand 12-month to 14.5 percent.<\/p>\n
Bank Dagang Nasional Indonesia of the Gajah Tunggal group
\nraised one-month deposit rates to 24 percent, three to 22 percent
\nand six-to-12-months to 17 percent.<\/p>\n
Bank Tamara increased one-, three- , six- and 12-month deposit
\nrates to 17 percent from 15 percent.<\/p>\n
Bank Bira raised its short-term rates -- one-week to one-month
\nrates -- to between 25 percent and 30 percent.<\/p>\n
Bank Bali raised its one-month rate to 25 percent, two to 23
\npercent, three to 22 percent, and six-to-12-months to 16 percent.<\/p>\n
ABN Amro Bank increased the one-month deposit rate to 30
\npercent, three-month to 23 percent and six-to-12-months to 18
\npercent.<\/p>\n
Bank of America raised the one-month rate to 20 percent,
\nthree-months to 16 percent and six-to-12-months to 15 percent.<\/p>\n
One-month deposit rates at Bank Indo Monex were also raised to
\n24 percent, three-months to 22 percent, six-to-12-months to 17
\npercent. Other small banks also joined the deposit rate increase.<\/p>\n
Overnight on-call rates increased to between 70 percent and
\n100 percent, one-week to between 50 percent and 60 percent and
\none-month to 50 percent.<\/p>\n
\"But foreign banks offered 65 percent for one-month on-call
\ndeposits. They upset the market because local private banks could
\nnot compete with them,\" the dealer at a local bank said.<\/p>\n
\"They charged higher rates because they have a smaller number
\nof depositors and because on-call rates are still cheaper than
\nswap premiums,\" he added.<\/p>\n
He said the one-month dollar to rupiah swap rate reached 180
\npoints yesterday, two-month 225 points, three 290 points, six 385
\npoints and 12-month 535 points. (aly\/rid)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/tight-money-policy-causes-banks-to-raise-rates-1447893297",
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"sponsor_url": "https:\/\/okusiassociates.com"
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