Macro Note:Indonesia,Bank Indonesia Introduced CNH Swap Hedging

After Bank Indonesia (BI) introduced the Swap Hedging Transactions (SHT) in Japanese Yen(JPY) on July 12, 2017 and Euro (EUR) on October 25, 2017, BI will also intorduce SHT for theoffshore Chinese Renminbi (CNH), effective from 6th December 2017. The addition of this newforeign currency used in the SHT was aimed to encourage more diverse sources of financing fornational economic activities.

    The so-called “window time” of SHT to Bank Indonesia in a non-US dollar currency is openedonce a week, which is every Wednesday at 14.00-16.00 West Indonesia Standard Time (SGPTime -1 hour). Commercial bank may propose a SHT to Bank Indonesia for the CNH currency inthat time window with a minimum nominal of CNH 10,000,000 with a multiple of CNH 1,000,000offer and available tenure for 3 and 6 months. Similar requirements of submission of thetransaction by providing the basic needs or underlying transactions apply (The regulation ofunderlying transactions has been set forth in Bank Indonesia Regulation No.18 / 8/2016 on ThirdAmendment to Bank Indonesia Regulation Number 15/17 / PBI / 2013 concerning Swap HedgingTransactions to Bank Indonesia).

    BI stated that through this policy, the central bank of Indonesia hoped to support the internationalinvestment and trade activities done through and in various currencies. In addition, the transactionis expected to help manage liquidity and maintain the stability of the Indonesian Rupiah (IDR).