Published: Wednesday March 20, 2013 MYT 8:15:00 AM
Bank Indonesia hopes to use new rupiah market reference rate from April
JAKARTA: Indonesia's central bank said it hoped to introduce a market-based reference rate for the rupiah from April, as part of efforts to create a local benchmark for the currency.
In February, Bank Indonesia said it planned to issue a rule setting a daily time for commercial banks to provide spot rupiah quotes but did not say when it would take effect.
"What we are going to do now is use a currency reference rate from the market. We will announce data at certain times (of the day). We have already met the banking sector to follow up and possibly next month this can be applied," newly named deputy governor Perry Warjiyo told Reuters on Tuesday. He did not say what times of the day the rates would be announced.
The central bank has been looking at ways to better control movements in its currency which fell sharply last year, and has long expressed concern over the lack of depth in the domestic foreign exchange market. It has been urging local banks to use an onshore market-based benchmark for settling forward rupiah contracts.
Last month, it reminded local banks that they were banned from trading in the offshore non-deliverable forward (NDF) rupiah.
However, Bank Indonesia officials have declined to comment on whether they have approached Singapore authorities to pressure banks there to abandon their reference rate for the rupiah.
A person with knowledge of the matter told Reuters earlier this week that banks in Singapore would probably abandon their reference rate for the Malaysian ringgit, something Malaysia's central bank has been pressing for as it too tries to control and deepen its onshore currency market. - Reuters