Indonesia and Australia Seal Currency Swap Agreement

 

A handout image released by the Royal Australian Mint, in Canberra, Australia, on 19 April 2015 shows one side of a new special Royal Australian Mint two Australian dollar coin. The coin has been minted to mark the centenary of the Australian and New Zealand Army Corps (Anzac) landings at Gallipoli. (EPA Photo)

Indonesia and Australia agreed on a three-year bilateral currency swap deal worth up to Rp 100 trillion ($7.13 billion) on Tuesday, in a bid to boost bilateral trade between the countries and help defend the rupiah against capital outflow.

 

"This bilateral currency agreement shows a commitment between two central banks to keep the macroeconomy and regional finance stability in facing global uncertainty," Bank Indonesia Governor Agus Martowardojo said in a statement.

 

Agus signed the deal alongside Governor Glenn Stevens of the Reserve Bank of Australia .

 

The deal, which was immediately effective from Tuesday, adds to similar agreements with China, Japan and South Korea.

 

Either of the two countries can swap 10 billion Australian dollar for Rp 100 trillion or vice versa under the deal to ensure trade transaction settlement in local currency despite pressure in the global money market. The deal also covers other needs that are agreed by the two parties, according to the statement.

 

Australia is the ninth biggest Indonesia's trade partner and main supplier of cattle and wheat for the archipelago.  The annual average trade between Indonesia and Australia in 2010 to 2014 reached $9.6 billion, according to Bank Indonesia.

 

The rupiah has fallen 13 percent so far this year and traded at 14,065 against the greenback on Tuesday, according to Bank Indonesia's Jakarta Interbank Spot Dollar Rate.