By: Dr. Hendrikus Passagi, Legal Consultant and Financial Market Analyst

Jakarta – In order to stabilize the rupiah exchange rate against the USD, Bank Indonesia (BI) intervention or BI’s “cawe-cawe” through the Non Deliverable Forward (NDF) market can be much more effective than intervention through the spot or cash market.

The bullets or foreign exchange reserves of the central bank will be quickly depleted if using the spot-market as conventional methods so far. In addition, the leverage is very weak and limited, as banks can be swarmed by well-capitalized speculators and retail speculators.