TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
BI keeping its eyes on 'super dollar'
Vice President Jusuf Kalla (center) walks with Bank Indonesia (BI) Governor Agus Martowardojo (right) during BIâs annual meeting at the Jakarta Convention Center in December, 2015
Change Size
Vice President Jusuf Kalla (center) walks with Bank Indonesia (BI) Governor Agus Martowardojo (right) during BIâs annual meeting at the Jakarta Convention Center in December, 2015. During the meeting, the central bank presented its outlook for the countryâs economy in 2016.(JP/Jerry Adiguna) (center) walks with Bank Indonesia (BI) Governor Agus Martowardojo (right) during BIâs annual meeting at the Jakarta Convention Center in December, 2015. During the meeting, the central bank presented its outlook for the countryâs economy in 2016.(JP/Jerry Adiguna)
V
span class="inline inline-center">Vice President Jusuf Kalla (center) walks with Bank Indonesia (BI) Governor Agus Martowardojo (right) during BI's annual meeting at the Jakarta Convention Center in December, 2015. During the meeting, the central bank presented its outlook for the country's economy in 2016.(JP/Jerry Adiguna)
The central bank is keeping its eyes on companies' compliance with hedging obligations to prepare for increasing pressure on the rupiah from a strengthening US dollar.
Currently, the global economy was the phase of the 'super dollar', a period when the US dollar was on an upward trend following the recent increase in the federal funds rate by the US Federal Reserve, Bank Indonesia Governor Agus Martowardojo said on Wednesday.
The US interest rate hike and low oil prices caused the US dollar to strengthen significantly due to the inflow of capital from developing countries to the US.
Agus said he estimated that the global economy would experience a super dollar within the next three years. The super dollar period, he added, posed a risk to Indonesian firms that have foreign currency loans.
"There is a risk that the debt becomes more expensive and that maturing loans will not be extended. These things need to be addressed to anticipate the super dollar period," Agus told reporters in Jakarta.
Hence, the central bank was examining the compliance of domestic firms with obligations to hedge against currency risks and convert some of their foreign currency loans.
"Based on recent data, as many 83 percent of the 2,400 firms that have submitted their reports have been hedging, as required by BI," Agus said.
The central bank issued hedging regulations in 2014 concerning precautionary principles in the foreign debt management of non-banking firms. (bbn)(+)
