Economy Policy

Government Welcomes BI’s Plan to Attract Foreign Capital

Coordinating Economic Minister Darmin Nasution has said the government welcomed Bank Indonesia’s (BI) decision to issue Bank Indonesia certificates (SBI) with 9-month and 12-month maturity periods in an attempt to attract more capital inflow to the country.

He said the policy would give investors more investment instruments. “Investors who initially wanted to pull out [their capital], may use their money to buy SBIs instead,” said Darmin in Jakarta on Friday.

BI’s plan to issue more investment instruments was announced by BI Governor Perry Warjiyo on Thursday. BI stopped issuing 9-month and 12-month SBIs in 2011 in favor of shorter-term instruments, such as repurchase agreements (repo).

The reissuance of the instrument came amid its decision to hold its key rate — the seven-day reverse repo rate — at 5.25 percent following a two-day BI board of governors meeting on July 18 and 19.

Attracting foreign capital is one of several strategies the central bank has applied in its effort to maintain the stability of the rupiah, which had suffered from the continuing external pressure from the strengthening of the US dollar against other currencies.

The external pressure against the rupiah will likely continue as the Federal Reserve still plans to increase its reference rate. (bbn)

The Jakarta Post

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