More Dollar Term Deposits Sold
The rupiah maintained its strong footing on Tuesday amid light trading volume in the local market after the central bank sold the second batch of dollar-denominated term deposits to local lenders on Monday.
Bank Indonesia raised $500 million from the sale of dollar term deposits on Monday. The central bank sold $100 million of seven-day dollar term deposits at 0.135 percent and $400 million of 14-day dollar term deposit at 0.15 percent. The central bank received bids totaling $1.2 billion, said Dody Budi Waluyo, Bank Indonesia’s director of the planning and research.
The central bank started selling dollar-term deposit last Wednesday as part of its efforts to defend the value of the rupiah against the dollar. The facilities were targeted at Indonesian lenders that have parked some of their dollar funds with overseas lenders. The facilities will also ensure that dollars are available in the onshore market, Bank Indonesia officials have said.
The central bank sold $700 million in dollar term deposits last week after receiving bids valued at $1.6 billion.
The rupiah, which lost almost 70 percent of its value during the Asian financial crisis of the late 1990s, depreciated severely again in recent weeks, amid a massive selloff by foreign investors.
In a statement, Dody said the facility would be offered for a month. He did not set an indicative target for the sale.
Analyst and debt traders in Jakarta said that the sale of the deposit facilities had eased pressure on the rupiah.
The rupiah was trading as low as 9,463 on Tuesday but was unchanged at 9,438 at its close from the previous day, according to Bank Indonesia data.
Indonesia raised Rp 6.85 trillion ($728 million) from selling treasury bonds and bills on Tuesday, exceeding its initial target of Rp 5 trillion, the debt management office at the Finance Ministry said.
Investors submitted total of Rp 13.3 trillion, according to the DMO, suggesting that foreign investors appetite for the local assets including remain strong.
A weak rupiah hurts the buying power of local consumers, but does boost the competitiveness of exports.