Derivative Transactions - Bank Indonesia Rule

Bank Indonesia (BI) has recently issued a Rule, No. 7/31/PBI/2005 on Derivative Transactions, to support BI efforts in maintaining and protecting the stability of the Rupiah through sound banking and financial market practices. As a consequence of recent fiscal and monetary policy Indonesia has become more integrated into the international financial market. This integration has allowed derivative transactions and margin trading in foreign exchange to develop and considering the speculative nature of these activities, the potential to influence the rate of exchange for the Rupiah must be subject to greater supervision and controls.