Indonesian Central Bank President Perry Warjiyo said at a video conference with investors that the bank does not plan to use this opportunity yet. Warjiyo said this agreement is a vote of confidence for the economy.
The Indonesian rupee dropped more than 14 percent against the dollar this year as investors left the developing markets and returned to the safe haven, making it one of the most falling currencies in Asia. According to data released today, the country’s Central Bank moved 9.43 billion dollars in foreign currency reserves last month, with moves to halt the decline.
Warjiyo stated that the country has around $ 121 billion of reserves and that this swap deal would be a secondary defense instrument if dollar liquidity is required.
The Fed set up a swap line with the central bank of 14 countries to clear the global dollar congestion during the virus outbreak on March 31. The Fed’s swap move allows central banks to temporarily acquire dollars for bonds.
Rupees and bonds rally after the swap statement. The currency rose 1.3 percent against the dollar, reaching 16,200, making the biggest increase since March 27. The 10-year bond interest rate fell for the first time in 7 days and decreased by 4 basis points to 8.16 percent.
