Financial industry could still tackle risk of rupiah weakening: OJK

Financial industry could still tackle risk of rupiah weakening: OJK

Spokeswomen of the Financial Service Authority (OJK) Sekar Putih Djarot (second left) said the financial industry especially banking still has healthy indicators, however, the regulators will continue to be watchful against external economic risks. (ANTARA Photo/Dhemas Reviyanto)

Jakarta (ANTARA News) - The Financial Service Authority (OJK) said the country`s financial industry could still mitigate the negative impact of the risk of rupiah weakening although it has depreciated by 8 percent year to date.

The financial industry especially banking still has healthy indicators, however, the regulators will continue to be watchful against external economic risks, OJK spokesman Sekar Putih Djarot said at a meeting here on Monday.

The financial industry is one of the largest asset contributors in the Indonesian financial system , Sekar said .

The non performing loan ratio of Indonesian banks average 2.73 percent gross; the third party funds held by banks grew 6.8 percent year-on-year and credits grew 11 percent yoy, he added.

He went on to say capital adequacy ratio (CAR) of the banking industry was 22 percent early September 2018.

"Amid the volatility of financial market, the risks in the financial industry are still manageable . The bank CAR is still strong," he said.

Sekar said so far the government, Bank Indonesia and OJK could still handle the impact of liquidity tightening in the global economy.

"There has not been tendency toward liquidity tightening in the domestic market," he said.

He said OJK appreciates Bank Indonesia`s aggressive market intervention over the past several days, adding OJK would fully support the government and the Central Bank in improving the country`s economic condition, and in reducing the current account deficit.

Current account balance is the parameter describing the inflow and outflow of foreign exchange through international trade of goods and services.

Sekar said the steps taken by OJK to cope with the current account deficit is by providing macro prudential incentives for banks, which contribute to driving the growth of export oriented industries.

He said OJK would also encourage the Export Financing Agency (LPEI) with export financing facility.

"In our policy, we provide incentive for banks, such as through relaxation of regulation on Risk Weighted Assets (ATMR) for ones contributing to boosting domestic exports. We also encourage LPEI to provide export facility," he said.

Bank Indonesia and the government hope to cut the current account deficit to around 2.5 percent of the GDP by the end of this year from 3.04 percent by the end of the second quarter of this year.

In a bid to keep stability in the rupiah exchange rate, OJK would tighten control over foreign exchange transactions in banks that purchases of foreign exchange tally with the requirement document, Sekar said.

"It is to prevent speculation in foreign exchange purchases that could weaken rupiah," he said.



Reporting by Indra Arief Pribadi
 Editing by Otniel Tamindael

 

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