TEMPO.CO, Jakarta - Bank Indonesia (BI) and the People’s Bank of China (PBC) have renewed the Bilateral Currency Swap Arrangement (BCSA) in the local currencies. The agreement’s extension, as well as enlargement, were signed by BI Governor Perry Warjiyo and PBC Governor Yi Gang.
“The agreement reflects the strengthened bilateral monetary and financial ties between BI and PBC, and indicates the commitment of both central banks to maintaining financial stability amid the lingering uncertainties in the global financial market,” said Perry in a press release on Monday, November 19.
Perry explained BI and PBC would raise the value of BCSA from CNY100 billion or equal to US$15 billion to CNY200 billion or US$30 billion. The agreement will last for three years based on mutual consent.
According to Perry, the deal showcased the strong ties between Indonesia and China in the financial sector.
He believed the cooperation with other central banks could further boost market confidence in Indonesia's economic fundamentals.
In the end of November 2015, then-trade minister Thomas Trikasih Lembong stated that the use of the Chinese currency, Renminbi (RMB), would curb the pressure of the Indonesian exchange rate against the US dollar (USD). This also applied to all other Chinese trading partner countries.
According to Lembong, President Jokowi seconded the statement on the sidelines of the G20 meeting with President Xi Jinping. Besides, the use of the renminbi was expected to step up China's investments in Indonesia and other trading partner countries. Thus, the country deficit could be returned in the form of investments.