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Panda bonds issuance could strengthen rupiah
About 28.61 percent of the government’s total outstanding debt was in US dollars as of July 24, while about 6.1 percent and 4.38 percent were in Japanese yen and euros, respectively.
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Stock brokers monitor the trading activities of bonds and other debt papers in a dealing room at the Treasury Bank Rakyat Indonesia in Jakarta. (kompas.com/Hendra A Setyawan )
B
ank Indonesia (BI) and analysts have suggested that the issuance of Panda bonds would make a good impact on the rupiah as the debt papers could diversify the country’s debt and help strengthen the currency.
Panda bonds are renminbi-denominated bonds from non-Chinese issuers sold within mainland China.
The Finance Ministry’s director of government debt paper, Loto Srinaita Ginting, said the government was considering issuing Panda bonds to tap into a new bond market and diversify its investor base, given that the renminbi had gained popularity in international commerce over the past several years.
However, she said the government would not issue the bonds any time soon as there were several things to consider before issuing them, such as the tenure, size and cost of the instrument.
Srinaita added that the government would make the bonds a benchmark for private or state-owned companies that would issue Panda bonds in the future.
“As long as there is demand from private Indonesian entities, we may consider the possibility of issuing the bonds,” she said in Jakarta on July 25. However, she added, so far there had not been any demand from those entities.
Although the issuance might not happen anytime soon, BI Governor Perry Warjiyo seemed to support the idea. Perry said the bonds issuance could make a positive impact on the country’s foreign exchange reserves and, in turn, stabilize the rupiah.
