SINGAPORE (THE BUSINESS TIMES) - The central banks of Singapore and Indonesia have extended their US$10 billion (S$13.6 billion) bilateral financial arrangement for another year.
The Monetary Authority of Singapore (MAS) and Bank Indonesia said in a joint statement on Thursday (Nov 5) that the extension has been endorsed by Indonesian President Joko Widodo and Singapore Prime Minister Lee Hsien Loong.
The extension will support monetary and financial stability in both countries amid the Covid-19 pandemic, the central banks said.
This is the second extension to take place since the bilateral financial arrangement's establishment in November 2018 to allow the central banks to access foreign currency liquidity from each other, if needed, to preserve monetary and financial stability.
The arrangement comprises two agreements. The first is a local currency bilateral swap agreement that allows for the exchange of local currencies between the central banks of up to $9.5 billion or 100 trillion rupiah.
The other is a bilateral repo agreement of US$3 billion that allows for repurchase transactions between the two central banks to obtain US dollar cash using G3 government bonds as collateral. These include United States treasuries as well as Japanese and German government bonds.
Bank Indonesia intervened to smooth volatility in the rupiah on Sept 2, as the currency came under pressure on worries about central bank independence, following a proposal to give the government more authority in monetary policy decisions.
