Indonesia, Japan to amend bilateral swap deal to include rupiah-yen
JAKARTA (May 4): Indonesia's central bank and Japanese finance ministry have agreed to amend their bilateral swap arrangement to allow Indonesia to draw the facility in yen as well as the US dollar, Bank Indonesia said on Friday.
Indonesia and Japan already have a swap agreement to tackle short-term foreign exchange liquidity problems since 2003, extendable every few years. The last extension was valued at US$22.76 billion and is due to expire in December 2019.
Before the amendment, Indonesia could only use the facility to get US dollars from Japan, said Doddy Zulverdi, who heads the international department at BI, adding that the new deal could expand the use of non-dollar currencies for transactions in the Southeast Asia region.
Indonesia could use the swap facility if it needs foreign exchange for rupiah stabilisation measures, Zulverdi said.
"We do this despite March's forex reserves at a safe level of US$126 billion ... we do not need to use this at all now," he told reporters in an embargoed press conference.
BI has been using its forex reserves to defend the rupiah , which has been trading at around its lowest level since January 2016 for the past couple of weeks as investors sold Indonesian assets after US Treasury yields rose.
The agreement would take effect after both countries sign the deal, which currently still awaits "some mechanism", Zulverdi said.
Friday's announcement followed a bilateral swap agreement that Japan did with the Philippines as part of efforts to step up stability measures in the region.
Indonesia has several currency swap arrangements with countries other than Japan, including Australia, China and South Korea. It also counts multilateral flexible credit line lik e the Chiang Mai initiative as its second line of defence in case it faces troubles in its forex reserves management or balance of payments.Source: Google News | Berita 24 English