Indonesia c.bank may buy Japan govt bonds, to aid rupiah liquidity
JAKARTA Dec 13 (Reuters) - Indonesia's central bank said it could buy Japanese government bonds (JGB) and bond repurchase agreements held by Japanese banks in the country to help bolster liquidity in the rupiah in case of a financial crisis.
The rupiah, Asia's worst performing currency, is among the most vulnerable to capital outflows from a tapering in monetary stimulus by the U.S. Federal Reserve due to concerns over Indonesia's sizeable current-account deficit.
The rupiah hit a near 5-year low of 12,075 to the dollar on Friday, and has fallen more than 20 percent so far this year.
Earlier on Friday, Bank Indonesia announced an expansion of its currency swap deals with the Bank of Japan to $22.76 billion, nearly double the $12 billion previously.
"The scheme will expand asset coverage, which can be used for Bank Indonesia's liquidity management, and improve flexibility in the liquidity management of banks operating in Indonesia," Bank Indonesia's spokesman Difi A. Johansyah said.
The G20 economy has secured a currency swap deal with Bank of Korea and the People's Bank of China, as a second line of defence in bracing against a sharp fall in the rupiah.
(Reporting by Rieka Rahadiana; Editing by Randy Fabi and Jacqueline Wong)
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