The two sides agree that such arrangement will contribute positively to the stabilization of the regional financial market and strengthen bilateral economic and financial cooperation to combat growing uncertainties in the global economy.

Meanwhile, Bank Indonesia issued PBI No.15/8/PBI/2013 to regulate hedging at banks. This new legislation regulates the hedging activity of local residents as well as business entities, excluding banks, incorporated and located in Indonesia, including state-owned enterprises.

The regulation was issued as a form of legal protection for economic players in terms of mitigating market risks amid the gyrations of the domestic foreign exchange market. As one of the efforts to mitigate such risk, economic players can hedge their economic activity using derivatives like forward and swap transactions. Furthermore, hedging is expected to deepen the domestic foreign exchange market.

The regulation also supports the ministerial regulation for state-owned enterprises, Peraturan Menteri Badan Usaha Milik Negara Nomor PER–09/MBU/2013, concerning hedging by state-owned enterprises promulgated on 25 September 2013.

Source: Bank Indonesia