BI Reveals 14 Banks as Offshore NDF Dealers

JAKARTA — Amid volatile global financial markets, Bank Indonesia (BI) has taken a tactical step by issuing a policy exception to the ban on offshore US dollar sales against the rupiah via Non-Deliverable Forward (NDF) transactions. The policy, outlined in Governor Council Regulation No. 7 of 2026, took effect on 4 May 2026 and is exclusively granted to 14 banks designated as Primary Dealers in the Money and Foreign Exchange Market. Of the 14 banks, four have headquarters in Indonesia while 10 are based overseas. The strategic move aims to increase US dollar supply in the market, thereby stabilising the rupiah’s exchange rate. The 14 banks designated as Primary Dealers in the Money and Foreign Exchange Market (DU PUVA) are: Ruth, Director of BI’s Financial Market Development Department (DPPK), explained that the policy is asymmetric, allowing only offshore NDF sales. This approach fundamentally distinguishes BI’s cautious strategy from other central banks. “This differentiates us from India: we only permit NDF sales. India previously allowed both buying and selling, leading to market shock and eventual policy revocation,” Ruth stated in her presentation on foreign exchange regulations. She stressed that allowing NDF sales aims to curb speculative pressure and support the rupiah. “Selling dollars via NDF strengthens the rupiah, unlike India’s approach. We require banks to cover their net foreign currency positions domestically using Domestic NDF (DNDF) in Indonesia for monitoring purposes,” she added. This domestic settlement requirement serves as BI’s primary monitoring tool. By bringing foreign currency settlements back onshore, the monetary authority can transparently assess the intent behind banks’ forex transactions. “We can monitor whether dollar demand is genuine or speculative. Speculation harms all Indonesians, rich or poor,” Ruth emphasised. Beyond DNDF settlement, BI has imposed strict operational requirements. First, designated banks are prohibited from conducting offshore NDF sales with their own affiliates to prevent intra-group manipulation. Second, primary dealers must have ISDA or CSA agreements with at least six domestic banks, ensuring widespread and even distribution of dollar liquidity across the national banking sector. Furthermore, the offshore NDF sales exemption is conditional and closely monitored through performance audits. BI conducts quarterly reviews, and any bank found violating operational rules, being ineffective, or deviating from monetary stability goals will have its exemption immediately revoked.