Bank Indonesia, the Indonesian central bank, plans tooffer term deposits with longer maturities of three months, six months and nine months as it seeks to reduce currency volatility following a surge in capital inflows.
The current maturities are for one and two months. BI's term deposits cannot be traded in the secondary market and investors must hold them until maturity.
Indonesia joins countries such as Brazil and South Korea in seeking to curb currency gains as near-zero interest rates in the U.S. and Japan spur funds to seek higher returns in emerging
markets. The rupiah has risen 5.2 percent against the dollar this year as investors poured money into an economy where the benchmark interest rate is 6.5 percent.
markets. The rupiah has risen 5.2 percent against the dollar this year as investors poured money into an economy where the benchmark interest rate is 6.5 percent.
BI is adding more instruments to absorb excess liquidity. BI introduced the one-month term deposit in July and the two-month deposit in October. The deposits have absorbed 52 trillion rupiah ($5.8 billion) of liquidity as of the third week of October.
No comments:
Post a Comment