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