SUMMARY OF BANK INDONESIA REGULATION
Regulation |
: |
Bank Indonesia Regulation No. 22/2/PBI/2020 on the Second Amendment to Bank Indonesia Regulation Number 20/10/PBI/2018 on Domestic Non-Deliverable Forward Transactions |
Effective Date |
: |
19 March 2020 |
I.
Background
The background of this regulation issuance is to hold the growing demand for USD by expanding types of underlying transactions for foreign investors in order to give alternatives for hedging of rupiah exposure. It aims to provide flexibility for foreign investors desirous of currency exposure, whereas due to market instability, the foreign investors are reluctant to have any position in
SBN and
stocks. Foreign investors may remain conducting hedging through DNDF while awaiting market to be stable for re-investment. It is accommodated through the use of foreign investor’s rupiah accounts as an underlying transaction for purchasing DNDF in USD/IDR.
II.
Regulation Materials
This regulation adds types of underlying transactions for DNDF as follows:
Underlying transactions for DNDF
cover all of the following activities:
a.
trade of goods and services within and outside the country;
b.
investments in the form of direct investments, portfolio investments, loans, capitals, and other investments within and outside the country;
c.
loan or financing extension by Bank in foreign currencies for trade and investment activities,
particularly
for transactions between a Bank and Customer; and/or
d.
Foreign Party’s rupiah account.
The term
“foreign party’s rupiah account” means all rupiah cash accounts of a Foreign Party with a Bank, among others in the form of savings accounts, checking accounts (giro), and/or deposit accounts for investments, for investment return saving, and/or for any other purposes.
