Indonesia Says New York Fed Offers USD60bn Credit Line

  • Indonesia’s central bank said the New York Federal Reserve will provide it with a USD60bn repurchase facility to help with liquidity needs amid a dollar shortage triggered by the coronavirus outbreak.
  • Bank Indonesia has no plan yet to use the facility, Governor Perry Warjiyo told investors on a conference call. The agreement on the credit line was a vote of confidence in the domestic economy, he said.
  • The rupiah has been the hardest hit in Asia in 2020, dropping more than 14% against the dollar, as investors pulled money out of emerging markets and fled to the safe-haven greenback, triggering liquidity shortages.
  • Bank Indonesia has taken aggressive steps to stem the fallout, draining USD9.43bn from its foreign reserves last month, according to figures released earlier on 7 Apr 20.
  • Indonesia’s reserves of about USD121bn are ample and the Fed’s credit line was a “second line of defense in case we need liquidity in dollars,” Warjiyo said.
  • While the central bank still sees room to lower rates, further easing may be risky “amid the current climate” and the bank’s priority is to guard the currency, Warjiyo said.

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