Indonesia central bank to conduct three FX swap this week: official

JAKARTA (Reuters) – Indonesia’s central bank will conduct three foreign exchange swap operations this week to ensure enough rupiah liquidity in the market following its benchmark interest rate hike, a senior bank official told Reuters on Monday.

Bank Indonesia (BI) raised its key rate , the 7-day reverse repo rate by 25 basis points to 4.50 percent on Thursday last week to bolster the rupiah and stem capital outflows.

The overnight contract for the Jakarta Interbank Offered Rate (JIBOR) rose to 4.22528 percent on average the following day, from 4.02500 percent.

“Even though the 7-day reverse repo rate was hiked 25 bps, we must maintain enough rupiah liquidity in the money market,” Nanang Hendarsah, BI’s head of monetary management said. “With more FX swaps, there will be more rupiah liquidity.” He added that BI will review whether to conduct two or three FX swap each week depending on market condition.

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