SINGAPORE: Bank Indonesia may unveil further measures to ease volatility in the rupiah and may announce next week new rules on bank ownership, a central bank official said.
"In the region, we still suffer from the turbulence from the European countries," Edi Setiadi, an executive director of the Shariah banking department at Bank Indonesia, told reporters in Singapore today.
"We are busy with how to act on the currency turbulence and Governor Darmin Nasution may announce measures to make the market calm," Setiadi said.
Bank Indonesia said last week it will start offering dollar term deposits to boost supply of the currency locally and stabilize the rupiah, the biggest decliner in Asia this year after the rupee.
Southeast Asia's largest economy joined India in moving to steady its exchange rate as the escalating European crisis spurs outflows from emerging markets.
"If we look at what is happening to the Indonesian market right now, Bank Indonesia should issue rules on repurchase agreements or reverse repo" to enable banks who have global bonds and need dollars to tap central bank funds, said Destry Damayanti, an economist at PT Bank Mandiri PT Bank Mandiri in Jakarta.
"This will help to stabilize the rupiah."
The government can also coordinate with Bank Indonesia to offer dollar-denominated government bonds to the domestic market, Damayanti said.
The rupiah declined today, bucking an advance among other regional currencies, after overseas investors cut holdings of the country's stocks. The currency weakened 0.7% to 9,468 per dollar as of 10:52 a.m. in Jakarta, according to prices from local banks compiled by Bloomberg.
"We have announced last week the dollar term deposit, that is our measures to ease rupiah" volatility, Bank Indonesia Deputy Governor Halim Alamsyah said in a mobile-phone text message today when asked about plans for new currency measures.
He declined to comment on additional steps the central bank may be considering.
The central bank is due to release its monthly monetary policy decision on June 12. It said last month it would take steps to reduce excess funds in the economy while extending a pause in interest-rate cuts as a declining currency and the threat of higher fuel prices push up inflation risks.
Governor Nasution cut the reference rate to 5.75% in February, the third reduction since early October. (Bloomberg/T03/aph)
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