SBI rate falls to 10.44%

SBI rate falls to 10.44%

The Jakarta Post, Jakarta

The interest rate on the one-month Bank Indonesia SBI promissory
notes fell to 10.44 percent on Wednesday during the weekly
bidding, compared to 10.68 percent in the previous week.

The central bank has been guiding its benchmark rate downward
for over a year now amid low inflation and the rupiah's stronger
exchange rate against the U.S. dollar.

The slide in the benchmark rate was the second since
Burhanuddin Abdullah was elected as the new central bank Governor
two weeks ago.

Burhanuddin has said that there was still room for the SBI
rate to decline to around 10 percent. He said that the lower
interest rate was crucial both to help ease the burden of the
government in servicing its domestic debt, and to push more bank
lending into the corporate sector.

Despite the declining trend of the benchmark rate, from over
17 percent early last year, lending from the banking sector to
the real sector has remained weak.

Burhanuddin said that he would hold a meeting with bankers to
seek ways on how to push banks, which have just started to
recover from the financial crisis of the late 1990s, to lend more
of their money to the business sector to help create economic
growth.

Bank Indonesia also announced that the country's foreign
exchange reserves in the third week of May increased by US$445.4
million to $34.47 billion.

The increase was mainly attributed to oil and gas revenue,
Bank Indonesia said in a press statement.