Indonesia sells dollars to increase yen reserves
Indonesia sells dollars to increase yen reserves
JAKARTA (JP): Indonesian government enterprises have sold a
large amount of U.S. dollars for yen in Tokyo in an apparent bid
to prepare reserves to pay yen-denominated loans.
The enterprises sold dollars for 114.50 yen on Thursday and
114.20 yen yesterday.
Other Asian nations took advantage of the recent slide in the
yen to snap it up cheaply for future repayments, AFP reported
from Tokyo.
Bank Indonesia (central bank) officials were not available for
comment yesterday on the purchase in the Japanese money market.
Bank Indonesia Governor J. Soedradjad Djiwandono said Thursday
the fall in the Japanese currency would shrink the government's
loans.
But the yen's dive, in dollar terms, also reduces the value of
the government's foreign reserves, 40 percent of which are in
yen.
"It has positive and negative implications," he said.
According to Bank Indonesia's annual reports, the government's
outstanding loans fell $4.4 billion to $58.2 billion in the
1995/1996 fiscal year ending March, from $62.6 billion in the
previous year.
The appreciation of the dollar against the yen caused the
loans to fall $4.2 billion. Yen accounts for 38.5 percent of the
government's outstanding loans.
The depreciation of the yen has not significantly impacted on
the Indonesian money market, in which transactions are
traditionally denominated in U.S. dollars and rupiah.
Bank Bira corporate advisor Parveen Gandhi said yesterday,
"This is nothing unusual. Transactions in yen are there but their
amount is not impressive."
He also told The Jakarta Post that yesterday's yen
transactions were as thin as usual.
Bank Bira, a major domestic loan arranger, occasionally sells
yen to importers for Japanese imports, he said.
Gandhi said it was still uncommon for Indonesian businessmen
to buy yen for loan payments because most loans were dollar-
denominated.
"Interest rates of yen loans are much lower, but many
Indonesian borrowers still prefer the dollar because the yen
fluctuates much more," he said.
The dollar, continuing its comeback from last year's record
lows against the yen, hit a 42-month high of 114.92 yen in Tokyo
on Tuesday. This was a 44 percent improvement on its post-war
global low of 79.75 yen set April 19, 1995.
Last year, the yen's sharp rise against the dollar drew
complaints from some Southeast Asian nations because it inflated
the burden of their loans from the Japanese government.
A Japanese foreign ministry official said repayments were made
monthly, rather than annually. As of March, Asian nations owed
the Japanese government around US$60 billion in yen. (hen)