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Tag: currency

  • Indonesia Signs Currency Swap Deal with Korea

    Indonesia Signs Currency Swap Deal with Korea

    Bank Indonesia (BI) and the Bank of Korea signed a bilateral currency swap arrangement (BCSA). Through the deal, both central banks will be able to swap currencies for a value of KRW 10.7 trillion or Rp115 trillion.

    The agreement was signed by BI governor Agus D.W. Martowardojo and Bank of Korea governor Lee Ju-Yeo, March 6. Agus said the BCSA extension will economic ties between the two nations through the use of their respective currencies.

    “The goal is to reduce our dependency on using a certain currency,” Agus said on Monday, March 6, 2017.

    According to Agus, the BCSA is part of the government’s initiative to deepen the financial market and support economic defense “especially in facing today’s economic uncertainties,” Agus said.

    The BCSA also guarantees the use of Indonesia and South Korea’s currencies in trading, to support the regional financial stability.

    Agus said the deal is valid for three years and can be extended if the two countries agree.

    The first BCSA between BI and Bank of Korea was signed on March 6, 2014, based on economic ties—especially in trade—between the two nations.

    South Korea is Indonesia’s fourth import destination with an average market share of 6.5 percent a year from 2010-2015. Korea is also Indonesia’s sixth export destination, with an annual market share of 6.8 percent in the same period.

    However, most transactions are denominated in US dollar. “That’s why we need to diversify the use of our own currency when trading with regional countries, to stabilize the rupiah,” Agus said.

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  • Rupiah May Extend Gain

    Rupiah May Extend Gain

    Reza Priyambada, a senior analyst of PT Binaartha Sekuritas, predicts that the rupiah will extend its gain. The rupiah is expected to move to around a support level of Rp13,385 and resistance level of Rp13,327.

    “Recent strengthening of the rupiah may open the opportunity for a rebound in the rupiah to extend its gain,” Reza said in a written statement on Tuesday, March 7, 2017.

    Rupiah moved in the positive zone yesterday. It strengthened by 33 points or 2.5 percent to Rp13,350 per US dollar. Raza said that stronger rupiah was due to weaker US dollar as Asian currencies got stronger.

    Rupiah has also strengthened as the Indian Ocean Rim Association (IORA) Summit takes place. The summit is expected to stimulate increase in foreign investment in Indonesia which may trigger economic growth and bolster foreign exchange reserves.

    Rupiah remained strong despite negative sentiment over China who has cut its growth target for 2017, from 6.5-7.0 percent to 6.5 percent.

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  • Bitcoin penetrates deeper into Indonesian market

    Bitcoin penetrates deeper into Indonesian market

    Bitcoin, a cryptocurrency that uses cryptography to make transactions anonymous, has penetrated deeper into the Indonesian market even though there is currently no legal umbrella for the currency’s use in the country.

    Bitcoin Indonesia currently has 250,000 members, up from 80,000 at the end of 2015, with a daily transaction value of Rp 20 billion (US$1.48 million).

    Bitcoin Indonesia business development manager Suasti Atmastuti Astaman said it was natural to see such a positive trend as Bitcoin had successfully gained global trust, especially following the recent Russian government’s decision to legitimize Bitcoin as an official currency at the end of November 2016.

    “Bitcoin’s value completely depends on supply and demand in the market. At present, as more and more countries have relaxed their stances on digital currency, including the United States, China and Russia, more and more people are putting their trust in it. That’s why Bitcoin’s value has been rapidly surging,” Suasti said.

    However, Suasti also said the Indonesian government might need more time to learn the know-how of Bitcoin, while waiting for its real impact in other countries that had legitimized the digital currency. “So, if someone asks when will Indonesia make Bitcoin an official currency, only God knows,” she said.

    As of Monday, Bitcoin was priced at $1,018 with a market capitalization of $16.36 billion, seeing an annual increase of 151.7 percent, according to CoinMarketCap.

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  • DBS offers cardholders dynamic currency conversion on overseas shopping

    DBS offers cardholders dynamic currency conversion on overseas shopping

    In a game-changing move, DBS Bank today unveiled its plans to help customers save on their overseas spending by avoiding high foreign exchange (FX) and conversion fees.

    Starting today, customers with a DBS Visa Debit Card linked to a DBS Multi-Currency Account (MCA)* can use their card to spend overseas in the country’s given local currency** without any additional charges. This scheme is the first of its kind in Southeast Asia.The savings will be greatest for Singapore customers who shop in overseas-based online stores or who perform credit/debit card payments overseas and choose to pay in SGD. When they pay in SGD overseas, their payment undergoes a process called “Dynamic Currency Conversion” (DCC), and customers can incur additional merchant charges of between 7% to 15%. In 2016, around 10% of payments by DBS Visa Debit cardholders were overseas transactions made in SGD.

    Customers who choose to pay in the country’s local currency also get to avoid any additional charges such as FX fees and any other conversion charges. For example, a Singapore traveller who intends to visit the U.S. can change currencies via their DBS MCA account (e.g. from SGD to USD), which offers competitive FX rates. This can be done on-the-go or when rates are favourable via DBS mBanking or iBanking. When spending in the U.S., the traveller can simply use their DBS Visa Debit Card to pay for purchases in USD. The amount is then directly deducted from their DBS MCA’s USD balance with no other charges incurred.

    “With travel and ecommerce expenditure rising rapidly in Singapore, we decided to be on the front foot and introduce a game-changing scheme for customers and the industry. With the DBS MCA and DBS Visa Debit Card, customers can convert their currencies at a competitive rate using DBS iBanking or mBanking without needing to make a trip to the money changer. They will also get to skip FX fees and conversion charges for their overseas spends. Our hope is that this will incentivise Singaporeans move towards the security and convenience of cashless payments,” said Jeremy Soo, Head of Consumer Banking Group (Singapore) at DBS.

    DBS’ introduction of the scheme is particularly timely given that it has witnessed close to a 30% increase in foreign currency payment volumes – which includes foreign currency eCommerce and point-of-sales payments – from debit cardholders since 2014. For DBS Visa Debit cardholders in particular, foreign currency payments make up more than 20% of total payments. DBS also sees some SGD560 million in overseas cash withdrawals every year by customers.

    “Travel is becoming increasingly popular amongst Singaporeans and based on the Consumer Travel Poll jointly conducted by Visa and DBS, more than half of them take two to four leisure trips a year. Visa cardholders are increasingly using their payment cards when they travel and cross border transactions by Singapore debit cardholders is growing close to 15% year-on-year. Today, 95% of Singaporean travellers change money into foreign currencies before they travel and the main reason is because they want to avoid the uncertainty of foreign exchange costs. The introduction of this first in market product in Southeast Asia by DBS and Visa supports Singapore’s move to be truly cashless,” said Ooi Huey Tyng, Visa Country Manager for Singapore and Brunei.

    To enjoy the benefits of the scheme, customers will need to sign up for both the DBS MCA and DBS Visa Debit Card. In addition, the customer’s DBS MCA must be linked to their DBS Visa Debit Card as a primary account. Further details on how to be eligible for the scheme’s benefits are available at go.dbs.com/sg-mca. Launched in 2013, the DBS MCA has rapidly built up a large base and has some 200,000 account holders today. In 2015, DBS made the DBS MCA a standard account for new customers to ensure customers will always have ready access to currency exchange. The DBS MCA is also the only multi-currency account in Singapore that allows exchanges in twelve key currencies (including SGD)*** – by far the most here. In addition, there are some 800,000 DBS Visa Debit cardholders here.

    The scheme, focused on helping customers who are frequent travellers avoid the hassle of carrying large amounts of cash overseas, is part of DBS’ larger plan to drive cashless payment behaviour and to bring innovation into financial services. This is something the bank is uniquely positioned to do given that it banks most of Singapore and is the nation’s largest credit and debit card provider, with some five million cards in circulation here.

    Over the last few years, the bank has launched several large-scale and game-changing offerings to help Singaporeans reduce their reliance on cash. This include innovations such as DBS PayLah! (for small merchants and micropayments), DBS FasTrack (for F&B SMEs), POSB Fare Free Friday (for public transport-related transactions); POSB Smart Buddy (for school kids) and more. The bank was also one of the first in Singapore to adopt all three mobile payment platforms – Apple Pay, Samsung Pay and Android Pay.

  • Singapore’s Central Bank to Test Blockchain-Backed Digital Currency

    Singapore’s Central Bank to Test Blockchain-Backed Digital Currency

    The Monetary Authority of Singapore (MAS) will soon test how it could issue digital currency using a v-based interbank payment system.

    The planned proof-of-concept will be supported by blockchain consortium R3CEV, as well as eight banks and an unnamed local stock exchange. The Development Bank of Singapore, HSBC, Bank of America, JPMorgan, Credit Suisse and Bank of Tokyo-Mitsubishi are all said to be participating.

    In a speech on Wednesday, MAS managing director Ravi Menon said the test could come to include other central banks. Further, he credited the bank’s desire to remove cost and friction from traditional bank transactions as the motivation for the effort.

    Menon said:

    “Today, banks have to go through correspondent banks to intermediate these payments. It takes time and adds to cost. This project marks the first step in MAS’s exploration of ways to harness the potential of central bank-issued digital currency.”

    The trial would find banks depositing cash as collateral with MAS, which would then issue a digital currency to participants. The digital currency could then be exchanged among participants in the system and later redeemed for cash.

    The forthcoming trial bears similarities to a previously announced effort from UBS, Deutsche Bank, Banco Santander and startup Clearmatics in August.

    Called Utility Settlement Coin, the project envisioned how a central bank could issue digital currency that could then be redeemed for cash held by a central bank.

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  • Peruri to build currency paper factory in 2017

    Peruri to build currency paper factory in 2017

    The state-owned money printing company, Peruri, has set a target to build a currency paper factory in 2017, according to the companys President Director, Prasetio.

    Such a currency printing firm is badly needed because Indonesia does not have one so far, Prasetio pointed out here on Monday.

    “God willing, we will be able to sign a Memorandum of Understanding (MoU) with our partners, so that it can be realized next year,” Prasetio explained, adding that the venture is open to both domestic and foreign investors to be partners.

    Prasetio further said that the currency paper plant will be built on Peuris own land in the West Java Provincial District of Karawang.

    Prasetio did not elaborate how much investment would be required for the project.

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  • Chinese shoppers deterred by rising Japanese yen

    Chinese shoppers deterred by rising Japanese yen

    Japan is starting to lose its edge as a shopping holiday destination for Mainland Chinese.

    Mainland Chinese shoppers are likely to become increasingly discouraged by the rising value of the Japanese yen against the yuan, according to analysis by Nikkei and Nomura International.

    While the Chinese accounted for just 1 per cent of Japan’s total retail spending in 2015, the share was rising and the total Japanese retail market is huge, given the wealth of its population. By comparison, Mainland Chinese account for close to 50 per cent of retail sales in Hong Kong and 30 per cent in Macau, according to Nomura. (Those figures exclude categories like cars and fuel).

    Hong Kong luxury retail sales are down by as much as 25 per cent due to the absence of wealthy mainlanders who have chosen to visit Japan, Korea, Europe and even the US thanks to more favourable exchange rates last year. Last year 4.99 million mainlanders visited Japan, attracted by the value of the yen and relaxing of visa restrictions. The average spend per visitor rose 20 per cent.

    However the advantage Japan held is slipping as the yuan weakens against the yen. In January, 1 yuan bought 18 yen, at its peak last May it bought 20. Today it buys just 16.

    Chinese tourist spending in Japan fell 10 per cent in the first quarter, accounting now for just 0.8 per cent of the total market, according to data from Japan’s Ministry of Economy, Trade and Industry. Their spend has fallen two months in a row.

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  • Indonesian retailers prepare for inflation shock

    Indonesian retailers have warned consumers of prices rises ranging from five to 12 per cent.

    Roy N. Mandey, chairman of the Indonesia Retailers Association (Aprindo), says the nation’s retailers plan to increase prices to consumers by an average of six to seven per cent as they battle with the weakening value of the rupiah.

    “Price increases for food and beverage products would be around five per cent, while electronics would see a hike of between 10 and 12 percent,” Mandey said in an interview with the Jakarta Globe.

    The Indonesian currency has lost 15 per cent of its value this calendar year, and the government has disrupted the economy further by introducing new import tariffs on many consumer goods and restricting alcohol sales in convenience stores.

    Mandey said in an interview he expected retailers to increase prices in October, a typically high month for stock replenishment.

    Members of Aprindo, which include hypermarket operator Matahari Putra Prima and convenience store network Sumber Alfaria Trijaya, have been struggling to respond to stagnating retail demand as the purchasing power of consumers has slipped.

    In July, Indonesian retail sales growth fell to its lowest level since last December, rising just 4.8 per cent.

    In 2014, Indonesian retail sales topped Rp 168 trillion, but the last estimate for 2015 stood at just 152 trillion. Aprindo is hoping for Rp 175 trillion but says for that level to be reached the government would have to remove some regulatory barriers.

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  • Hongkongers must wake up to new yuan reality

    Hongkongers must wake up to new yuan reality

    For a long time, Hong Kong people and corporates enjoyed a free ride on the renminbi as the Chinese currency promised steady appreciation and high returns.

    But the steep devaluation this week has spoilt the party for good, and everyone — be it multinational corporations operating out of IFC 2 or housewives in Ngau Tou Kok — is now seeking to repatriate money back from China to Hong Kong.

    Thanks to the Stock Connect between Hong Kong and the mainland, the daily limit of transferring Hong Kong dollar to renminbi was lifted last year.

    But for those who took advantage of the easier rules and shifted to China assets and chose to stick with them would have got hurt by the yuan’s downward move and the recent A-share collapse.

    Apparently more corporates have been hurt, rather than benefit, from the weaker yuan.

    Among international firms, Apple Inc, for instance, saw its share price move into correction territory on Wall Street as investors were concerned about the tech giant’s large China sales exposure.

    In Hong Kong, the weak yuan led fashion-wear retailer I.T. Ltd. to issue a profit-warning on Thursday, with the firm saying that it estimates a HK$60 million loss from a decline in the value of its renminbi time deposits.

    The tiny retailer’s decision to swiftly mark down its assets sent some shockwaves through local investing circles and also led to a guessing game as to which other cash-rich listed firms might be having huge exposure to the Chinese currency.

    Last month HKTV announced the purchase of a 11 million yuan bond bearing 6.25 interest and another 15 million yuan bond of 4.85 percent interest, but the asset has seen its value come off 4 percent this week.

    Likewise, Asia Financial chief executive Bernard Chan also said his company had HK$400 million exposure in yuan which earned a 3 percent coupon. With the yuan’s devaluation, the effective returns will be zero.

    Apart from corporates, individuals would also now have to think twice on where to park their money once their fixed-term yuan deposits mature.

    As there are fears of further devaluation of the renminbi, the Chinese unit has lost its earlier safe-haven status.

    For investors, the formula that previously gave them super returns on the yuan is no longer working amid China’s new normal.

    On the bright side, imported deflation could help ease the rise in consumer prices in Hong Kong. Prices will remain elevated no doubt, but they are unlikely to climb much higher.

    Meanwhile, a weaker renminbi could also cool down mainland investor interest in Hong Kong property, providing some relief to locals.

    That said, we should also be prepared for the negative consequences of reduced overseas spending power of the mainlanders.

    There might be diminished capital flows into the local stock market, and the tourism and retail industries could also face more rough weather.

    It’s time for Hongkongers to wake up to a new reality.