BI will launch 2 new monetary instruments

Jakarta – Bank Indonesia (BI) will issue new monetary instruments as an effort to attract foreign capital into RI which will be implemented starting November 17, 2023.

Governor of Bank Indonesia, Perry Warjiyo, mentioned the instruments to attract foreign capital, namely Bank Indonesia Foreign Exchange Securities (SVBI) and Bank Indonesia Foreign Exchange Sukuk (SUVBI).

“The issuance of Bank Indonesia Forex Securities (SVBI) and Bank Indonesia Forex Sukuk (SUVBI) is a pro-market monetary instrument to deepen the money market and support efforts to attract portfolio inflows, by optimizing foreign currency securities assets owned by Bank Indonesia as underlying,” Perry said in the RDG press conference, Thursday, October 19, 2023.

He also explained, the tenor in this new instrument will consist of 1, 3, 6, 9, and 12 months for SVBI. Meanwhile, SUVBI has a tenor of 1, 3 and 6 months. Each monetary instrument is an instrument that can be traded in the secondary market.

“It can also be traded with non-residents. The interest rate is also a market mechanism so that it will be attractive to the market and therefore can encourage foreign capital flows into the portfolio,” he explained.

In addition, BI is also preparing derivative instruments for SVBI and SUVBI, namely interest rate swaps (IRS), and foreign exchange swaps.

“We are also preparing derivative instruments, namely, rupiah derivative instruments are IRS, interest rate swaps, which are swaps between fixed interest rates and variable interest rates. But between rupiah and foreign exchange we will also deepen the foreign exchange swap,” Perry said. (*)