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View all search resultsGovt did not order state banks to raise dollar deposit rate: Finance minister
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Finance Minister Purbaya Yudhi Sadewa provides information regarding the economic package program after a coordination meeting with President Prabowo Subianto at the Presidential Office in Jakarta on Sept. 15. (Antara/Muhammad Adimaja)
F
inance Minister Purbaya Yudhi Sadewa said on Friday he did not instruct state banks to raise their United States dollar deposit rate to 4 percent, and that the government was still considering what incentives to offer to bolster the domestic US dollar supply.
Four state lenders earlier this week announced that they would raise their US dollar deposit rate starting from Nov. 5.
The decision has been criticized by some economists as counterproductive to efforts to stabilize the rupiah, which has been under pressure in the past week amid growing investor concerns about the credibility of Indonesia's fiscal policy and the independence of Bank Indonesia (BI).
"I have never ordered banks to raise deposit rates like that," Purbaya told a press conference, adding that BI Governor Perry Warjiyo, with whom the minister had just had lunch, also did not know why the state banks had made the move.
"There was a discussion, I told you before, that there will be an incentive for foreign currency holders to move their foreign currency funds from Singapore to Indonesia," he said.
"But this discussion is still ongoing and risks are being calculated."
He said he would not intervene in the operations of state banks, but he would "advise the banks to correct" their policy.
Among the critics of the state banks' decision was former finance minister Chatib Basri, who wrote on the X social media platform that it could encourage customers to keep their funds in US dollars rather than rupiah.
Basri, who is also a former chairman of state-owned Bank Mandiri, said this could lead to higher rupiah interest rates and increase demand for dollars, further weakening the rupiah exchange rate.
The rupiah has been under renewed pressure since BI unexpectedly cut policy rates on Sept. 17, a move viewed by the market as bowing to President Prabowo Subianto's push to accelerate economic growth.
The rupiah hit 16,790 against the US dollar earlier on Friday, its lowest since April, but has since regained some of its losses.
Before the market opened on Friday, BI ‘s Perry said in a statement that the central bank would use all available instruments to defend the currency.
"Bank Indonesia is boldly using all available instruments, both in the domestic market through spot instruments, domestic NDF and government bonds purchases in the secondary market, as well as in foreign markets in Asia, Europe and America on an ongoing basis through NDF interventions," he said.
