Indonesia-S’pore currency agreements

Deals likely to boost confidence: Analysts

Indonesia has suffered a sharp drop in the value of the rupiah, caused by a widening current account deficit - where imports of goods and services exceed exports - amid US-China trade tensions.
Indonesia has suffered a sharp drop in the value of the rupiah, caused by a widening current account deficit - where imports of goods and services exceed exports - amid US-China trade tensions.PHOTO: REUTERS

They signal growing mutual trust, serve as 2nd line of defence in uncertain times

A planned US$10 billion (S$13.8 billion) currency swap deal and US dollar repurchase agreement between Singapore and Indonesia will boost confidence in uncertain times, say analysts.

They say both would serve as a second line of defence, complementing the existing Chiang Mai Initiative, a multilateral currency swap arrangement among Asean members plus China, Japan and South Korea. Indonesia has never called it into use. The Indonesia-Singapore deals would also signal growing trust between the two neighbours, the analysts say.

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A version of this article appeared in the print edition of The Straits Times on October 15, 2018, with the headline 'Deals likely to boost confidence: Analysts'. Print Edition | Subscribe