FX Swap oversubscribed at inaugural auction: BI

JAKARTA. Bank Indonesia (BI) said the central bank’s issue of FX Swap at the inaugural auction on Thursday was oversubscribed.

At the auction, the FX Swap was oversubscribed with bids amounting to US$1,240 million from the $500 million targeted, with maturity periods of one, three and six months.

BI deputy governor Perry Warjiyo said that of the total bids, the central bank decided to accept $600 million from the auction and this showed a positive response from the market.

“This shows the market’s trust in the liquidity condition in the domestic market, in particular the liquidity of the foreign currencies, is getting stronger,” said Perry in a statement in Jakarta on Thursday.

Perry said the auction of FX Swap was part of efforts to strengthen the policy mixture carried out by BI, and this had three objectives.

“First, the FX Swap’s auction is part of efforts to strengthen the central bank’s monetary operations to manage the liquidity of foreign currencies and rupiah in the markets,” Perry said.

Second, he said, it was a hedging instrument for investors and business players against the risks of the rupiah currency rate’s moves over their foreign currency and the rupiah’s liquidity needs.

“Third, it is one of BI’s efforts to push the deepening of the market through a much more efficient and transparent price establishment and instrument enrichment, so that market players do not only depend on the cash market instrument in their liquidity management,” said Perry.

BI said it was sure that various measures taken to strengthen its policy mixture would continue to strengthen the stability of the rupiah currency rate, inflation control and the stability of monetary system overall. (ebf)

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