Bank Indonesia Reduces Spot Intervention to 30%
Bank Indonesia cuts spot intervention to about 30% of total forex intervention, shifting toward DNDF and NDF to stabilize the rupiah.
TEMPO.CO, Jakarta - Bank Indonesia (BI) has cut its reliance on spot transactions used to stabilize the rupiah, with such intervention now making up approximately 30 percent of the central bank's overall foreign exchange measures. BI Governor Destry Damayanti revealed the move, stating that spot transactions were deemed more expensive.
Instead, the bank is increasing its use of Domestic Non-Deliverable Forward (DNDF) and Non-Deliverable Forward (NDF) instruments. "Spot transactions now account for only around 30 percent of the total intervention we carry out," Destry stated during a meeting with House of Representatives Commission XI in Jakarta. Unlike spot transactions, DNDF and NDF are financial derivatives that do not necessitate the direct delivery of US dollars when contracts settle, enabling BI to stabilize the exchange rate with less reliance on direct US dollar transactions.
Destry highlighted that the expanded use of DNDF and NDF has been more effective in maintaining rupiah stability. Despite this shift in strategy, the rupiah still faces pressure due to structural issues in the external economy. BI and the government, through the Financial System Stability Committee (KSSK), are continuing discussions on strengthening the external sector by boosting exports and investment.
Written by urgent.news from Tempo.co English's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
