BI drains Rp 2.2t from banking system

BI drains Rp 2.2t from banking system

Bank Indonesia drained Rp 2.2 trillion (US$231.9 million) from the banking system by auctioning three-day debt to reduce the amount of funds available to local banks.

The central bank sold the so-called Fine Tune Kontraksi securities at 3.625 percent through an auction that ended at 4 p.m., it said in a statement in Jakarta on Monday. The sale was to "absorb excess liquidity over the short-term," the bank said.

The central bank has previously sold two-day, three-day, four- day and six-day FTKs. It drained Rp 1.96 trillion on May 25 by offering a six-day maturity at 5.75 percent.

The auctions, which started on April 26, are aimed at soaking up funds at banks, pushing up interest rates and reducing the amount of rupiah lenders have available to buy dollars, Bank Indonesia said last month. The debt will "stabilize the foreign- exchange market," Bank Indonesia's spokesman Halim Alamsyah said on April 26.

The rupiah has fallen 2.3 percent against the dollar this year, the fourth-worst performer among 15 Asia-Pacific currencies tracked by Bloomberg. It traded at 9,486 in Jakarta. -- Bloomberg