BI Keeps Working to Prop Up Rupiah
With worries over the euro zone crisis still looming large over global financial markets, Bank Indonesia continued on Wednesday with measures to prop up the value of the rupiah against the dollar.
For the third time in a week, the central bank sold dollar term deposits to Indonesian lenders, raising almost $600 million.
It sold $135 million of the 31-day dollar term deposits at 0.18815 percent, Bank Indonesia said in a statement. It also sold $265 million of the seven-day version at 0.13 percent, and $195 million of the 14-day deposit at 0.15 percent.
The central bank received $1.1 billion in bids, suggesting that demand from Indonesian banks remained high.
Bank Indonesia started selling the dollar term deposits on Wednesday last week, receiving $1.6 billion in bids and raising $700 million. On Monday, it raised $500 million in its second auction after receiving total bids of $1.2 billion.
Bank Indonesia began selling the dollar term deposits to try to strengthen the value of the teetering rupiah against the American greenback. The offers were targeted at Indonesian lenders that have parked some of their dollar funds with overseas lenders. This will ensure that dollars are available in the onshore market, Bank Indonesia officials have said.
Still, the rupiah weakened. It was trading at 9,463 on Wednesday, compared with 9,438 on Tuesday, according to data from the central bank.
Foreign investors, who have dumped the country’s assets in recent weeks, returned to the local financial markets including the equity and bond markets on Wednesday, foreign exchange and debt traders in Jakarta said.
The benchmark stock measure, the Jakarta Composite Index, rose 1.6 percent to 3,943.90 on Wednesday. Foreign investments of Indonesian bonds rose to Rp 224 trillion ($24 billion) as of June 18, from Rp 223.2 trillion on June 15, data from the debt management office at the Finance Ministry showed, suggesting that foreign investors remain attracted to high-yielding assets.
The y ield on government debt maturing in 10 years fell to 6.4015 percent on Wednesday from 6.5022 on Tuesday, according to the Indonesia Bond Pricing Agency.