Open Market Operations - Third Amendment

Bank Indonesia (BI) has recently issued Rule No. 7/30/PBI/2005 (the “New Rule”) amending Rule No. 4/9/PBI/2002 on Open Market Operations (OPT). The basic premise of the New Rule is to improve the effectiveness of OPT with respect to Rupiah and foreign exchange money markets.

The New Rule inserts 2 new Articles, Article 4B and 4C that expressly state the authority of BI to intervene in the foreign exchange money market in the form of spot, forward, and swap buy/sell transactions involving the Rupiah. Swap transactions may not exceed 7 days.