Indonesia's c.bank wants state-run firms to hedge forex needs
JAKARTA Oct 9 (Reuters) - Indonesia's central bank, in a bid to reduce volatility in the rupiah, has encouraged the country's state-controlled enterprises to use hedging to manage their foreign-exchange needs.
In a statement on Wednesday, Bank Indonesia (BI) specified that the country's regulations on hedging also apply to state-owned companies and not just private ones and individuals.
Under Indonesia's existing rules, firms and individuals wanting to hedge must show banks documents on their investment, trade and foreign-debt repayment activity. The maximum amounts of allowed hedging is capped by an applicant's economic activity.
Wednesday's statement specifies that state firms can use a decree issued by the Ministry of State-Owned Enterprises on Sept. 25 and BI regulations "as a legal umbrella in hedging," central bank spokesman Difi A Johansyah said.
"There's no change in the rules," he said, describing the BI statement as a "reinforcement of current regulations".
The idea is to encourage companies to use hedging to help them secure needed foreign currencies in an orderly way that does not add to volatility in rupiah trading.
Officials says that until now, some state-controlled companies have considered hedging as detrimental to national interests as they have not felt they were allowed to use it. Because they haven't used hedging, some state firms have sparked surges in dollar demand that have caused the rupiah to fall sharply.
This year, the rupiah has lost more than 16 percent against the dollar - making it Asia's worst-performing currency - due to a ballooning current-account deficit and high demand for dollars.
On Tuesday, after a BI policy meeting that held the benchmark interest rate at 7.25 percent, Governor Agus Martowardojo told reporters the central bank would unveil measures to deal with volatility in financial markets because of a potential U.S. debt crisis.
It appears that Martowardojo was referring to the central bank's move to get all companies in Indonesia, including state-owned ones, to use proper hedging.
Indonesia's state oil firm PT Pertamina is the biggest buyer of dollars. According to the finance ministry estimate, the firm needs at least $150 million a day for oil imports to meet demand in Southeast Asia's biggest economy.
(Reporting by Rieka Rahadiana and Adriana Nina Kusuma; Editing by Richard Borsuk)