BI fines foreign bank for breaching forex ruling

BI fines foreign bank for breaching forex ruling

JAKARTA (JP): Bank Indonesia deputy governor Achjar Iljas said
on Thursday that an unnamed foreign bank has been fined for
breaching a newly introduced foreign exchange ruling.

Achjar said the foreign bank had exceeded the maximum limit
for overdraft transactions with non-residents allowed under the
new ruling.

"I sure the fine has already been imposed... it's just a
matter of withdrawing it from the account it (the foreign bank)
has with us," Achjar said on the sidelines of a seminar on Bank
Indonesia's annual report for the year 2000.

He did not mention the name of the bank and the size of the
penalty imposed for breaching the overdraft transaction limit.

"I don't remember the exact amount, but it could be around 30
percent of the total transaction value," Achjar said.

Responding to Bank Indonesia comments that a Jakarta-based
foreign bank had been fined, British-based Standard Chartered
said that it had received notification from the central bank on
the issue.

Standard Chartered chief executive for Indonesia Ray Ferguson
said that Bank Indonesia had sent the bank a letter regarding
three "relatively small" transactions made last month.

"The letter includes references to penalties associated with
those transactions," Ferguson said in a press statement.

"We have only become aware of this issue today, and are
currently reviewing BI's (Bank Indonesia) concern over these
transactions internally, and will make a full response to BI
shortly," Ferguson said.

In January, the central bank issued a ruling that limited
rupiah offshore trading, by setting a ceiling to rupiah
transactions between onshore banks and non-residents.

Bank Indonesia issued the ruling to curb speculative attacks
against the rupiah on offshore markets.

The ruling dries up the rupiah supply on offshore markets thus
preventing speculators from getting hold of rupiah.

Onshore banks can still lend rupiah to offshore banks through
intraday overdraft facilities, but they must not exceed a set
limit.

The rupiah initially stabilized after the foreign exchange
ruling was issued, but has since begun to fluctuate again due to
the recent worsening political situation.

In response, the government has urged state companies to sell
their U.S. dollars to shore up the ailing rupiah.

State-owned airline PT Garuda Indonesia and two airport
operators, PT Angkasa Pura I and PT Angkasa Pura II, said they
had been selling their U.S. dollar reserves.

Garuda president Abdulgani said, without stating the amount,
that based upon a request from the Coordinating Minister for the
Economy, Rizal Ramli, his company had sold some of its dollar
reserves to help ease the pressure on the rupiah.

He said the move would not influence the national flag
carrier's earnings because the management would only sell excess
funds from its revenue.

"We will calculate our earnings in foreign currency, how much
our expenditure is in foreign currency, and sell the excess,"
Abdulgani told reporters during a break in a hearing with the
House of Representative's Commission V for industry and trade.

President of the state-owned airport operator PT Angkasa Pura
I, Gatot Pudjo Martono, said that the company would sell at least
one third of its U.S. dollar reserves or between $5 million and
$10 million.

About 50 percent of the company's earnings were in dollars, he
said, adding that last year Angkasa Pura II recorded profits of
between Rp 250 billion (about $25 million) and Rp 300 billion.

"This year we expect profits to increase to about Rp 375
billion," Gatot said.

Meanwhile, president of PT Angkasa Pura II Miskul Firdaus said
that the airport operator had sold $4.25 million of its dollar
reserves on Wednesday at the behest of the Coordinating Minister
for the Economy Rizal Ramli.

"About 60 percent of our revenue is in dollars, and we still
have a large amount of dollar reserves," he said, adding that
next month the company would sell around $21 million.

Miskul said that the company had often used its dollar
reserves to pay for import facilities as well as putting them in
time deposits.

"But because of the recommendation from the government, we
will let go of a larger amount," he added.

The rupiah on Thursday gained on the U.S dollar by ending the
day's trading at 10,060, compared to 10,150 the day before.

Dow Jones quoted an unnamed Bank Indonesia official as saying
that the central bank had borrowed rupiah from the interbank
money market early Thursday to tighten liquidity.

"We are still quoting the amount, but I think its above Rp 1
trillion," the official said.

Dealers said Bank Indonesia borrowed rupiah from overnight
tenure at 13 percent, four-day tenure at 12.75 percent and five-
day tenure at 13.25 percent. (bkm/tnt)