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Financial authority to issue currency hedging regulation
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Bank Indonesia (BI) Governor Agus Martowardojo shows the rupiah banknotes introduced on Dec. 19, 2016. (Antara/Yudhi Mahatma)
T
he Financial Services Authority (OJK) plans to issue a regulation on currency hedging to help investors protect their investments in the stock market against the possible decline of the rupiah.
“The regulation is expected to minimize the currency risks for foreign investors with more competitive pricing,” said OJK Chairman Wimboh Santoso on Tuesday.
He hoped the currency hedging regulation, which was now under preparation, could be implemented within the next few months.
Wimboh said with the currency hedging facilities, investment in the Indonesian stock market would be more attractive to foreign investors because their investment would be protected from a possible drop in the currency’s value against foreign currencies.
The Indonesian Stock Exchange was among the best performers in Asia last week. The Stock Exchange Composite Index hit a record high at 6,355 at the close of last year’s trading. The index rose by 20 percent from 5,296 at the close of trading in 2016.
The rupiah was also relatively stable during 2017. It ended the year at Rp 13,520 against the US dollar, a slight decline from Rp 13,400 in early January.
Wimboh said with a more conducive investment climate, the stock market would play a more important role in providing funds for business activities. The funds raised from Indonesia’s capital market reached a total of Rp 257.02 trillion in 2017, exceeding the OJK’s target of Rp 217.02 trillion. (fny/bbn)
