By Stefanno Sulaiman
JAKARTA (Reuters) -Indonesia’s Finance Minister Purbaya Yudhi Sadewa on Friday said he did not order state banks to raise their U.S. dollar deposit rate to 4%, and that the government was still considering what incentives to offer to bolster the domestic U.S. dollar supply.
Four Indonesian state lenders earlier this week announced that they will raise their U.S. dollar deposit rate starting from November 5.
The decision has been criticised by some economists as counterproductive to efforts to stabilise the rupiah currency, which has been under pressure in the past week amid growing investor concerns about the credibility of Indonesia’s fiscal policy and the independence of its central bank.
“I have never ordered banks to raise deposit rates like that,” Purbaya told a press conference, adding that the central bank governor Perry Warjiyo, with whom the minister had just had lunch, also did not know why the state banks made the move.
“There was a discussion, I told you before, that there will be an incentive for foreign currency holders to move their foreign currency funds from Singapore to Indonesia,” he said.
“But this discussion is still ongoing and risks are being calculated.”
He said he would not intervene in the operations of state banks, but he would “advise the banks to correct” their policy.
Among the critics of the state banks’ decision was former finance minister Chatib Basri, who wrote on the X social media platform that it could encourage customers to keep their funds in U.S. dollars rather than rupiah.
Basri, who is also a former chairman of state-owned Bank Mandiri, said this could lead to higher rupiah interest rates and increase demand for dollars, further weakening the rupiah exchange rate.
The rupiah hit 16,790 against the U.S. dollar earlier on Friday, its lowest since April, but has since regained some of its losses.
Before the market opened on Friday, Bank Indonesia Governor Warjiyo said in a statement that the central bank would “boldly” use all available instruments to defend the currency.
(Reporting by Stefanno Sulaiman; Writing by Gayatri Suroyo; Editing by David Stanway)
