BI Promotes Yuan-Rupiah Transactions, Reduces Dollar Dependence

JAKARTA - Bank Indonesia Governor Perry Warjiyo said the yuan-rupiah market is beginning to grow in the country. This step is part of BI's efforts to strengthen exchange rate stability and reduce dependence on the US dollar.

"The yuan market with the rupiah has already developed in the country," Perry said at the Presidential Palace Complex, Jakarta, Tuesday, May 5.

According to Perry, local currency transactions between Indonesia and China continue to increase. Therefore, the domestic yuan-rupiah market is beginning to form.

"Our local currency with China, the Chinese yuan and the rupiah are very high," he said.

Perry said the use of local currencies could help diversify from the US dollar. That way, the pressure on the rupiah from the need for dollars can be reduced.

"This is local currency so it reduces or diversifies from the dollar," Perry said.

In addition to strengthening the yuan-rupiah transaction, BI also increased its intervention in the offshore Non-Deliverable Forward or NDF market abroad. Offshore NDF is a market for rupiah exchange rate contracts abroad, without direct currency delivery. This market is widely used by investors to measure the direction of the rupiah exchange rate in the future.

Perry said the move was made so that BI would be better able to control the development of the rupiah exchange rate in the offshore market.

BI also opens space for domestic banks to participate in transactions in the NDF offshore market.

"We also allow domestic banks to participate in the sale of offshore NDF abroad," he said.

According to Perry, the strengthening of the yuan-rupiah market and the involvement of domestic banks in offshore NDFs are part of BI's steps to maintain rupiah stability, both in the domestic and foreign markets.