Purchasing Foreign Exchange Against the Rupiah

Bank Indonesia states that one of its primary tasks is to ensure stability in the Rupiah. Therefore, BI has issued Regulation No. 10/28/PBI/2008 in order to fulfill this primary task and to prevent, or at least limit, currency speculation.

The Regulation lowers the nominal amount of transactions from USD 500,000 to USD 100,000 per month. Furthermore, there must be an underlying transaction that warrants the purchase up to the nominal amount.

Banks are responsible for ensuring that the provisions are followed. Any bank that does not comply with the prevailing provisions is liable to administrative sanctions. These sanctions include fines of up to IDR 10 million per offense.

The Regulation was issued to protect the stability of the Rupiah however the Rupiah has fallen quite dramatically in currency markets. This suggests that the BI policy has not convinced the markets that this is enough to protect and maintain the value of the Rupiah.

The Regulation was issued on 12 November 2008 and has been in force since 13 November 2008 and the provisions of Article 7 will come into force on 1 December 2008.