Bank Indonesia to hold more auctions to boost rupiah liquidity

[JAKARTA] Bank Indonesia will conduct regular open market operations of repo and foreign exchange swap auctions three times per week to boost rupiah liquidity in the banking system, the central bank said in a statement.

The publication of a fixed auction schedule for the next six months is expected to increase certainty for lenders in managing their liquidity. The move comes as the central bank seeks to shield the financial industry from the impact of an aggressive tightening cycle in 2018.

The central bank has conducted two repo auctions and three foreign exchange swap auctions in February. The schedule of such auction was previously only made available on a monthly basis.

Bank Indonesia injected 345.5 trillion rupiah (US$24.1 billion) through repo auctions in 2018 and has lent 76.5 trillion rupiah in January and February. It also provided 243.33 trillion rupiah through foreign exchange swap auctions last year.

Bank Indonesia left its benchmark interest rate unchanged for a third month in February after raising rates for a total of 175 basis points last year. With the Federal Reserve signalling a more flexible policy stance, the governor said Bank Indonesia's benchmark rate has almost reached its peak.

Indonesia's rupiah tumbled the most in eight months on Friday, trimming its year-to-date gain to 0.5 per cent.

BLOOMBERG