Major banks yet to increase dollar deposit rates

Dadan Wijaksana, Jakarta

Despite the shaky showing of the rupiah, something that might be expected to encourage bank depositors to turn to dollar savings products, a number of top banks here have yet to consider raising the interest rate for dollar accounts to take advantage of the opportunity.

Gottfried Tampubolon, country treasurer at Citibank N.A. Indonesia, said on Sunday that no major policy changes had been planned so far, including raising dollar time deposit rates.

"Currently, we're already experiencing an excess in our dollar liquidity. So, for the time being there is no plan to raise the interest rate on (dollar) time deposit," Gottfried told The Jakarta Post.

"At least until after there is a concrete decision by the U.S. Fed to hike its rates. Perhaps then we'll review the situation once again."

Gottfried added that currently dollar deposits made up about half of the bank's total deposits.

A similar stance is also been adopted by The Hongkong and Shanghai Banking Corporation Ltd. (HSBC), which says it has made no change to its dollar deposit interest rates so far, and does not plan to do so in the near future.

"We do not have any plans for a hike. While we need to wait and see where the current trend is going, we've also noticed that despite the recent rupiah fiasco there have been no changes in the trends displayed both by our rupiah and dollar depositors.

"So, I do not see why we should make any changes," Agung Laksamana, HSBC Vice President Public Affairs, told the Post.

Gottfried and Agung were responding to questions as to whether they would benefit by the recent collapse of the rupiah.

The local currency has so far lost about 9 percent of its value since the start of the year, exceeding the around 7 percent in gains it booked all through 2003.

However, both Gottfried and Agung agreed that the current high volatility of the local currency would only be temporary, with the rupiah expected to rebound from its slump.

"Indonesia's economic fundamentals are relatively good. I do not see any reason for the dollar to keep strengthening," said Gottfried.

Ekoputro Adijayanti of Bank Permata told the Post that since the dollar only accounted for around 10 percent of the bank's total deposits, Permata had no plans to profit from the dollar's strength.

"Aside from that, we do not need a lot of dollars. Perhaps this is because we focus more on SMEs, and retail and commercial customers, rather than corporations," Ekoputro said.

Permata currently offers an average interest rate of 0.73 percent for its short-term deposits, slightly higher than the 0.2 percent offered by both Citibank and HSBC.