A press statement from BI received by ANTARA here on Monday mentioned that the agreement, which aimed at maintaining monetary and financial stability, was agreed by BI Governor Perry Warjiyo and Managing Director MAS Ravi Menon.
Warjiyo stated that this initiative reflected the strengthening of bilateral cooperation between the two countries and indicated the commitment of the two authorities to maintain regional financial stability despite uncertainty in global financial markets.
Menon hoped that the bilateral financial agreement could increase investor confidence as it reflected Indonesia`s close relationship with Singapore. He also hoped the agreement would strengthen every anticipative act to cope with global conditions.
The bilateral financial agreement will be valid for one year and consists of two commitments, namely bilateral swap agreement in local currencies and bilateral repo agreement in foreign currencies.
This bilateral swap agreement is a new agreement that allows the exchange of local currency between the two central banks to the value of 9.5 billion Singapore dollars or Rp100 trillion, equivalent to $7 billion.
With this agreement, it is possible for one of the central banks to obtain foreign exchange from other central banks by exchanging local currency in the prevailing exchange rates. The agreement also allows the central banks to redeem the amount using the same exchange rate at maturity period.
Meanwhile, a bilateral repo agreement on foreign exchange is an amendment to an existing agreement. The new agreement mentions increasing repo value from $1 billion to $3 billion.
Through the agreement, the two central banks can obtain foreign exchange liquidity in US dollars with collateral in the form of the government bonds issued by the main countries, as well as exchange back to the agreed maturity period.
The signing of this agreement is a follow-up of an agreement between Indonesian President Joko Widodo and Singapore Prime Minister Lee Hsien Loong on Oct 11, 2018, on the sidelines of the IMF-WB Annual Meeting in Nusa Dua, Bali.
On that occasion, the two leaders asked the monetary authorities in their respective countries to form a bilateral financial cooperation agreement that could support the building of economic trust between the two countries.
Reporting by Satyagraha
Editing by Libertina, Rahmad Nasution
Reporter: antara
Editor: Heru Purwanto
Copyright © ANTARA 2018
