BI Opens Auction, Intervenes DNDF, Rupiah Strengthens
Translator
Editor
18 December 2018 17:10 WIB
TEMPO.CO, Jakarta - The head of the Bank Indonesia (BI) Monetary Management Department, Nanang Hendarsah, said that the current strengthening of the rupiah occurred after BI opened an auction in the Domestic Non-Deliverable Forward (DNDF) transaction at 8:30 a.m. BI opened the DNDF auction with a Fixed Rate Tender method, for 15 minutes.
“After the auction, BI intervened DNDF directly via 8 brokers, resulting in a decline in the spot rate to Rp14,500, and managed to reach Rp14,480 at 11:00 a.m.,” Nanang said in a message received by Tempo, Tuesday, December 18.
Nanang said that amid the negative sentiment on the stock market, due to the decline of stocks in the United States stock exchange, the rupiah had strengthened since the opening in the morning from Rp14,580 to Rp14,480 at noon.
“With the presence of BI on the DNDF market, the NDF rates traded on foreign markets are not too wild. Even now the foreign NDF exchange rate follows the DNDF exchange rate,” he said.
In the auction or DNDF intervention, Bank Indonesia does not use foreign exchange reserves, but in rupiah, depending on the results of two-day fixing before the DNDF contract is due.
In the future, said Nanang, DNDF auction will be held regularly every day at 8:30 a.m., and can be opened at the afternoon session at 3:45 p.m. In between the time, BI can intervene DNDF.
The auction and intervention, Nanang said, in addition to maintaining the stability of the rupiah, also to make the DNDF market become more developed and liquid.
