JAKARTA- Indonesia’s central bank is eyeing investment from foreign institutional investors and asset managers with its new securities in US dollars to be launched on Nov. 21, officials said on Wednesday.
The inaugural auction for the so-called SVBI and its Islamic finance version SUVBI will be days behind Bank Indonesia’s (BI) original announcement of Nov. 17 for the launch.
The securities will replace the regular US -dollar term deposits for tenures between 1 to 12 months in the central bank’s open market operations.
They will be offered with a minimum purchase of $1 million. They can be traded in the secondary market or used for repurchase transactions.
Monetary policymakers are still considering whether to conduct fixed or variable rate tenders, said Rahmatullah, BI’s Head of Reserve Management Department, adding BI is looking at pricing the securities with a premium over the Secured Overnight Financing Rate (SOFR).
The instruments are aimed not only to manage any excess US dollar liquidity in domestic banks, but to also bring capital inflows through non-resident purchases in the secondary market, Edi Susianto, BI’s head of Monetary Management Department, said in a press conference.
“What’s important is how we can fill up our pool (of FX supply), attract capital inflows, by opening the room for foreign investors, not only from domestic”, he said.
BI has been sounding out the new instruments to banks and big investors onshore and offshore and they have shown interest, Edi said.