Japan, RI reach swap deal

Japan, RI reach swap deal

Dow Jones, New York

Japan and Indonesia have agreed on a bilateral rupiah-dollar
swap arrangement aimed at ensuring stability in the currency
market by supplying short-term liquidity, the two countries said
in a joint statement, Kyodo News agency reported Tuesday.

The agreement, reached by the Japan's Finance Ministry and
Bank Indonesia, will enter into force after a signing ceremony by
officials of the Bank of Japan (BOJ) and the Indonesian central
bank in Tokyo in mid-February, the statement said.

The agreement enables Bank Indonesia to swap rupiahs for up to
$3 billion with Japan's central bank as short-term liquidity in
the event of a temporary shortage of foreign reserves, according
to the statement.

The move is part of an initiative agreed by the Association of
Southeast Asian Nations (ASEAN) and China, Japan and South Korea
in Chiang Mai, Thailand, in May 2000 to establish a currency swap
network, Kyodo reported.

The currency swap scheme, known as the Chiang Mai Initiative,
is aimed at linking the international reserves of the 10 ASEAN
countries with those of the three dialogue partners through a set
of bilateral pacts to prevent a currency crisis.

Indonesia will be the sixth country to conclude a bilateral
currency swap deal with Japan. Other countries that have signed
such deals with Japan are South Korea, Thailand, the Philippines,
Malaysia and China, Kyodo said.