Indonesia plans longer occupancy contracts in the domestic NDF market by mid-2022

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JAKARTA, June 25 (Reuters)The Indonesian central bank plans to introduce longer duration contracts of three to 12 months in the domestic non-deliverable forward market (DNDF) for the rupee and the US dollar by the second half of 2022 to deepen the market, an official said on Friday.

Bank Indonesia (BI) launched the DNDF market in 2018 to create a parallel with the Singapore undeliverable rupee futures market as an alternative hedging instrument against the US dollar for companies and foreign investors.

Singapore’s NDF market has often been accused of speculating against the rupee.

The domestic market currently trades contracts with one-month and three-month maturities, with an average trading volume of around $ 100-150 million per day, mostly for the shorter duration and excluding central bank auction, said Donny Hutabarat, BI’s money market development manager. .

“It’s about developing user characteristics. Active users with real demand and accounting positions in banks will need three to 12 months (instruments),” Hutabarat said.

BI is also looking to add Malaysian Ringgit, Thai Baht and Japanese Yen to the DNDF market, as Indonesia has concluded local currency settlement agreements with these countries, he said. He did not provide a timeline for the launch of non-US dollar instruments.

Indonesia and China are finalizing a local currency settlement deal, he said.

(Reporting by Tabita Diela and Gayatri Suroyo; Editing by Simon Cameron-Moore)

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