Sept. 10 (Bloomberg) -- Indonesia said it is seeking bilateral swap agreements with two more central banks to protect its sliding currency.
The country may sign accords this quarter that will allow it access to more than $30 billion from new and existing swap lines, Finance Minister Chatib Basri told reporters in Jakarta today, declining to name the central banks. Indonesia may extend a bilateral swap agreement with China, Bambang Brodjonegoro, head of fiscal policy at the Finance Ministry, said today.
Indonesia extended a $12 billion swap line with Japan last month as policy makers try to bolster a rupiah that has fallen 11 percent this quarter, the worst performer among 24 emerging-market currencies tracked by Bloomberg. Officials join counterparts in India, Brazil and Turkey to support their exchange rates as the prospect of reduced U.S. monetary stimulus fueled a selloff in emerging-nation assets.
“It certainly helps,” said Fauzi Ichsan, an economist at Standard Chartered Plc in Jakarta. “It doesn’t mean Indonesia is out of the woods yet.”
If the swap tenors are long enough, the central bank can borrow dollars and repay when there is more certainty over U.S. stimulus plans and the Indonesian economy, Ichsan said.
Indonesia’s foreign-exchange reserves were $93 billion last month, little changed from $92.7 billion in July, Bank Indonesia said Sept. 6. The level of reserves in July was the lowest since October 2010, according to data compiled by Bloomberg.
The reserves level, combined with slowing economic growth, accelerating inflation and a record current-account gap, have contributed to the weakening of the currency. The rupiah was unchanged at 11,160 per U.S. dollar as of 12:25 p.m. in Jakarta today, according to prices from local banks.
The central bank extended the Japan agreement because it expects more volatility in international markets, it said last week. India also reached an agreement with Japan this month to more than triple its bilateral currency-swap line as it seeks to stem a record slide in the rupee.
Indonesia and China in 2009 agreed on a three-year 100-billion yuan ($16 billion) currency swap to ease foreign-exchange shortages and aid bilateral trade and investment.
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