In response to Rupiah's rapid decline in value, the central
bank of Indonesia, Bank Indonesia (BI), has issued a series of
regulations requiring that certain documentation be produced in
foreign exchange transactions against Rupiah above a certain
The documentation must show the underlying transaction
necessitating the foreign exchange. Underlying transactions
accepted by BI include the trade of goods and services, both
domestic and international. BI also accepts investments in the
form of direct investment, portfolio investment, loans,
capitals, or other investments as qualified underlying
transactions necessitating the exchange.
However, BI does not deem placement of funds in banks in the
form of savings or time deposits as a qualified underlying
transaction. Fund transfer between companies and undrawn credit
facilities are not deemed as qualified underlying transactions
within the BI rules either.
Initially, the threshold requiring proof of an underlying
transaction is set at $100,000 per month per customer for spot
transactions where Rupiah is being sold. The threshold for
derivative transactions where Rupiah is being sold is also set
at $100,000. The threshold for forward or option transactions
where the foreign currency is being sold is set at $1,000,000
per customer per month.
The threshold has been adjusted on numerous occasions.
Currently, the threshold is set at $25,000 per month per
customer for spot transactions for the sale of Rupiah. The
threshold for forward transactions where the foreign currency
is being sold is set at $5,000,000. The threshold for option
transactions where the foreign currency is being sold is set at
The threshold for derivative transactions where Rupiah is
being sold remains at $100,000.
Oene Marseille and Emir Nurmansyah