Central Bank To Launch Three Strategies To Stabilize Rupiah

Jakarta (Antara Bali) - Bank Indonesia said it is applying three short term strategies to create rupiah stability amid the protracted global crisis.

"We will optimize monetary operations both in rupiah market and in foreign exchange market," head of the economic and monetary policy department  of the central bank Juda Agung said here on Thursday.

The three strategies are strengthening  the management of rupiah liquidity in the financial market, foreign exchange  supply and demand and foreign exchange reserves.

 In operation the three strategies would be applied through a number of policies  including intervention in foreign exchange market to control rupiah volatility  and  purchasing state securities at secondary market by observing market liquidity;

"We will strengthen rupiah liquidity management through open market operation to create longer liquidity," Juda said.

Rupiah liquidity management will be made by changing the mechanism of auction, he said.

The central bank will also change the mechanism of  auction for Bank Indonesia deposit certificate (SDBI) from  variable rate tender  to  fixed rate tender  and would issue 6-month SDBI.

The central bank would issue again 9-month and 12-month Bank Indonesia Certificate (SBI) with fixed rate tender .

The frequency of auctions for Foreign Exchange (FX) Swap would be changed from twice a week to once a week, Juda said.

The mechanism of auction for term deposit for foreign exchange would be changed from variable rate tender to  fixed rate tender, and the term is longer up to 3 months, he added.

The central bank would lower the  foreign exchange purchase limit  from US$100,000 at present to US$25,000  per client  a month.

"We will coordinate with the government and central banks of other countries to strengthen our foreign exchange reserves," he said. (WDY)