"Multilateral foreign exchange futures transactions could reach US$500 million a day."Jakarta (ANTARA News) - Indonesia`s Commodities Futures Trading Supervisory Agency (Bappebti) plans to expand coverage to include foreign exchange futures trading.
"This strategy is taken so that foreign exchange income from exports would not be parked abroad, but could be traded at the foreign exchange futures market," Bappebti chief Syahrul R Sampurnajaya said here on Friday.
He also said the government is now preparing a regulation to improve Regulation Number 9 of 1999 on commodities futures trading.
"One of the aims is to develop an infrastructure for foreign exchange futures trading in Indonesia, since Bank Indonesia recently issued foreign exchange term deposits for that purpose, though it is not allowed to do that," he said.
Early this month, Bank Indonesia held an auction of 7-day, 14-day and one-month foreign exchange term deposits to absorb the excess foreign exchange supply in the inter-bank money market, which has so far been sold abroad with an interest rate of 0.2 to 0.3 percent a year, or above that offered by the inter-bank money market of 0.1 to 0.2 percent.
"While demand from businesses reaches US$2 billion a day, Bank Indonesia could only provide US$300 to US$500 and so the strengthened futures exchange is expected to become an alternative for foreign exchange supplies," he said.
Syahrul said if Indonesia has a foreign exchange futures market, businessmen or banks that have foreign exchange currencies could trade them at home, and if they need them for imports they could also purchase them at home.
"Moreover, trading is also guaranteed through futures clearance with yields so that risks could be hedged to provide benefits," he said.
On June 6, PT Bursa Komoditi dan Derivatif Indonesia (BKDI) also launched 27 foreign exchange futures contracts to reduce foreign exchange risks and assure transparent, competitive and secure price formation.
He said the government`s planned regulation, among others, raises paid-up capital at the futures exchange to Rp100 billion and at futures clearing agency also to Rp100 billion, from initially only Rp20 billion.
"Multilateral foreign exchange futures transactions could reach US$500 million a day, so a clearing agency is needed to be a guarantor in case of payment problems," he said.
The planned law also provides an opportunity to individuals to hold shares in the futures exchange of up to 10 percent, and to 40 percent for foreign entities.
"Later, all futures exchanges will provide clearing services and sell shares to businessmen, meaning BKDI could also sell shares and register to Bappepam (the Capital Market Supervisory Agency)," he said.
(T.D017/Uu.H-YH/INE/KR-BSR/A014)
Editor: Priyambodo RH
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