Bank Indonesia in talks with countries on currency swaps

Jakarta (VNA) – Bank Indonesia (BI) said on April 3 that it is in talks with the US Federal Reserve (Fed) about potential currency swaps, while also preparing bilateral swaps with the central banks of China and Australia.

BI Governor Perry Warjiyo said on April 2 that Indonesia’s foreign exchange (forex) reserves, as the central bank’s “first line of defense”, were adequate.

At 130.4 billion USD in February, Indonesia’s dollar reserves are enough to cover 7.7 months of imports, well above the healthy international standard of three months.

The second line of defense is bilateral swaps with a number of central banks, Perry said. He cited agreements worth 30 billion USD with China, 22.7 billion USD with Japan, around 10 billion USD with Singapore,  and with Australia and other central banks.

BI is also communicating with the Fed to strengthen this bilateral swap partnership to tackle liquidity issues.

The central bank’s forex reserves have been relatively buoyant despite it having intervened in the financial market, including by buying government bonds on the secondary market to ease selling pressure and to stabilise the rupiah.

The rupiah, already the worst-performing currency in Asia this year, currently trades at around 16,525 rupiah against the greenback, Bloomberg data shows.

BI pledged to stabilise the rupiah at 15,000 rupiah per USD by year-end, although the government has projected the rupiah will hover around 17,500 rupiah to 20,000 rupiah under the worst-case scenario of the COVID-19 pandemic being prolonged./.