SBI rate falls slightly to 13.06%

SBI rate falls slightly to 13.06%

The weighted average interest rate on the benchmark one-month
SBI promissory notes fell slightly to 13.04 percent, in the
weekly auction held Wednesday, from 13.06 percent last week.

The fall was in line with market participant's expectations.

Bank Indonesia said that it accepted Rp 16.16 trillion (about
US$1.8 billion), or 94 percent, of the total bids it received at
the auction.

The central bank also auctioned Rp 14.85 trillion of three-
month notes, which represented 99 percent of the total incoming
bids it received for the tenor.

The weighted average rate for the three-month notes fell to
13.12 percent from 14.11 percent last month.

Bank Indonesia has been trying to drive domestic interest
rates lower to reduce the cost of servicing bonds issued by the
government to bail out local banks after the 1997 Asian financial
crisis.

Bank Indonesia is expected to guide the one-month SBI rate to
between 12.5 percent and 12.75 percent by the end of the year.

The pace of the rate cuts, however, is slowing down as
inflationary pressure is expected to rise during the last three
months of the year. -- Dow Jones