Bank Indonesia Misses Target on 6-Month Term Deposits

Bank Indonesia sold 1.3 trillion rupiah of six-month term deposits at a yield of 6.52271 percent, less than its target of 60 trillion rupiah, the central bank said in a statement today.

“Banks are still studying their liquidity profile,” Hendar, director of monetary operations at the central bank, said by phone after the auction. “So banks need to make sure that they have good liquidity.” 

The central bank is taking measures to mop up excess cash in the system and prevent a sudden outflow of foreign capital as near-zero interest rates in Europe and the U.S. lead investors to seek higher returns in emerging markets such as Indonesia. It discontinued selling six-month bills yesterday, switching to bills with a nine-month minimum tenor.

Bank Indonesia is also preparing to sell nine-month term deposits, Deputy Governor Budi Mulya said yesterday, without giving a timeframe. Source: Bloomberg