Bank liquidity safe facing external risks

Jakarta : The countrys bank liquidity is safe and will remain safe despite external risks which might come with an increase in the fund rate of the US central bank, The Federal Reserves, the Deposit Insurance Agency (LPS) said.

There has not been significant threat to the countrys banking liquidity, Chairman of the Board of Commissioners of LPS Halim Alamsyah said after a meeting here of the Financial System Stability Committee on Tuesday.

So far LPS, which provide insurance for bank deposits, has not seen transfer of funds beyond the normal level, Halim said.

"We are safe in banking. There is no large withdrawal or large transfer of funds," he said.

On the contrary Halim said banks are more flexible in managing liquidity after the central bank relaxed its policy in bank reserve requirement.

Earlier, Chief Executive the Indonesian Stock Exchange Tito Sulistio said normally government shutdown in the United States would not last long, therefore, the effect would not be expected to be significant on the countrys economy.

"I think the shutdown would not last longer than 18 days," he said.

Director of Supervision of Transactions and Compliance of BEI Hamdi Hassyarbaini said short term shutdown would not have negative impact on the countrys stock market.

Economist from the Institute for Development of Economics and Finance Bhima Yudhistira said currently Indonesia has enough foreign exchange reserve to help stabilize exchange rate in the event of market turbulence.

By December, 2017, the countrys foreign exchange reserve was US$130 billion, he said, adding, however, Bank Indonesia needs to continue efforts to increase the countrys foreign exchange reserve anticipating the possibility of the shutdown would last longer than 2 weeks.

He said too long shutdown could trigger global economic turbulence. As safety net against external pressures, foreign exchange reserves should be strengthened both in value and quality by increasing earning from exports and tourism.

He said if the government shutdown would last longer than estimate, Indonesian exports to the worlds largest economy would likely shrink.

Indonesias exports in 2018 might decline as the United State is still one of the countrys largest export destinations, he said.

Source: ANTARA News

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