BI Regulation Allows Hedging Flexibility

Indra A Pambudy

Bank Indonesia (“BI”) has issued Regulation No. 14/10/PBI/2012 (“Amendment”) on The Amendment to BI Regulation No. 7/14/PBI/2005 on Limitation of Rupiah Transactions and Foreign Currency Credits by Banks (“Regulation”).

The Amendment was issued with two policy objectives in mind: first, to add flexibility in “Hedging” for foreign exchange (forex) derivate products trading. Second, to stabilize the rupiah exchange rate by minimizing speculative forex trading and forex derivative trading (see Amendment’s elucidation).