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Explainer: How BI wants to lure back dollars to buttress rupiah
Using the carrot rather than the stick, Bank Indonesia (BI) promises attractive interest rates for exporting firms that deposit their forex receipts at domestic banks.
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The office building of Bank Indonesia (BI) in Jakarta on Feb. 26, 2020.
(JP/Dhoni Setiawan)
B
ank Indonesia (BI) has introduced a new policy that will grant exporters interest rates comparable with those offered by foreign banks so that they would keep their export receipts inland, all to fill up the central bank’s foreign reserves needed to maintain rupiah stability.
The move is deemed important as more than 30 months of trade surplus, including some record highs over the past year, have done little to help Indonesia fill up its foreign reserves.
Many exporters have opted to deposit their export revenue abroad, because foreign banks offered lucrative interest rates, often more than twice that available at domestic banks, according to BI data.
In effect since the beginning of March, BI says the policy has already attracted US$173 million worth of foreign exchange as of March 16 from nine exporters operating in the sectors of mining or plantations.
BI has so far appointed 20 banks to handle the transactions but said it would soon require all lenders to offer such a deposit service. The government announced earlier this year that, aside from natural resource exporters, it would also require manufacturing exporters to join the scheme.
Read also: Govt reaffirms plan to make exporters bring 30% of revenue home
