Indonesia to Propose Foreign Exchange Loan
Friday, 10 October, 2008 | 08:32 WIB

TEMPO Interactive, Jakarta: Bank Indonesia said on Thursday it will use the ASEAN Bilateral Swap Agreement a mechanism to swap local currency against the dollar to beef up the national foreign exchanges Reserves after financial turmoil hit the country's financial market by the most severe scale compared to that of other ASEAN countries.

The BSA according to the Deputy Governor of the central bank Hartadi Sarwono worth US$ 12 billion. The swap is a form of cooperation agreed in Chiang Mai Initiative at the ASEAN Finance Minister's Meeting in 2000, which provide short term aid for member countries with financial liquidity problem usually under 90 days.

Interest rate for the loan is set at 150 basis points above the London Interbank Offer Rate. The LIBOR rate of US dollar for three month period as of October 2nd posted on the LIBOR official website was 5,3175. The interest rate would be added by 50 basis points for every three month of extended loan period up to a maximum of 300 basis points.

Indonesia's foreign exchange reseves as of September 29th 2008 were at US$ 57,108 billion, lower than the previous month reserves at US$ 58,356 billion.

Eko Nopiansyah