Indonesia and Australia agree to $10 billion currency swap
(16 December 2015 – Indonesia) Indonesia's central bank has signed a 100 trillion rupiah (A$9.8 billion) bilateral local-currency swap agreement with its Australian counterpart to counteract potential market volatility.
The agreement, effective immediately, will last for three years and can be extended if both sides consent, the Reserve Bank of Australia (RBA) said in a statement. It's designed to promote bilateral trade and will ensure that trade between the two countries can continue to be settled in local currencies even in times of financial stress, Bank Indonesia said in a statement.
The deal with Australia adds to similar agreements that Indonesia has with China, Japan and South Korea, while the Federal Reserve denied a request earlier in the year by authorities in Jakarta for a currency-swap line, according to an official with knowledge of the matter.
"Fed or no Fed, rain or no rain, this is a long-term policy to safeguard stability," Aida Budiman, head of the international department at Bank Indonesia, said following the announcement.
"The Aussie dollar is a global currency. We have had a long trade relationship with Australia and there is potential in the future." Indonesia and Australia had two-way trade worth A$15.7 billion last year.
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