Indonesia's central bank said on Thursday it will intervene in the forward currency market through auctions starting this week to sell or buy rupiah, introducing a new tool to stabilise a rupiah currency that hit 17-year lows last month.
In a regulation uploaded at its website on Thursday, Bank Indonesia (BI) said banks or intermediary institutions may participate in the auction with minimum transaction of $1 million.
The tenders will be either fixed or variable rate tenders, the minimum forward point bid is 1 rupiah.
The new regulation also lowered to one week from one-month the minimum holding period for BI-issued rupiah denominated certificates, that is debt paper of up to 12 months.
BI Governor Agus Martowardojo said earlier on Thursday that the BI would issue certificate denominated in foreign currency from mid-November.
Forward intervention and lower minimum holding period are part of BI's policy package announced in September in response to volatility in the rupiah exchange rate.
The package had heralded the plan to issue securities in foreign currency and also to offer cheaper rates for longer tenure foreign currency swaps for infrastructure projects.
The realisation of infrastructure related swap may take sometime because BI is still calculating the rate, BI's executive director of economic and monetary policy Juda Agung said.