JLS JPYIDR Bank Indonesia Sterilization Target 136.25-122.00
The Bank Indonesia and the Bank of Japan sterilization target on the JPYIDR set at 136.25-122.00 in compliance to the inter-central banks' consensus. The Bank Indonesia and the Bank of Japan collectively manage and maintain the medium term price stability at their established width (wide) of target zone as well as manage the short term price stability (sterilization) to slower the weakening of the IDR by the JPY in accordance to the inter-central banks' consensus. HOWEVER, the established width (wide) of medium term exchange rate target zone 20 % wider than global monetarists' consensus and TOO RISKY for Indonesian Rupiah (IDR) due to large JPY-denoinated debts to fund Indonesian economy.
At 20 % wide of exchange rate target zone, a IDR 100,000,000 outstanding loan principal on JPY-denominated debt jumping up to over IDR 200,000,000 in five year term despite of low interest rate offered by the JPY-denominated lenders. Bank Indonesia needs to compromise a "new medium term exchange rate target zone" to be jointly managed and maintained, probably 10 %, due to the fact that JPY-denominated debts are fueling Indonesian economy, and the Indonesian economy to downside risk in long term. If NOT ANTICIPATED, the next YENDAKA could be faced by Indonesia.
Do not over confidence with the current professionally managed medium and short term price stability levels, but the width (wide) of target zone is at VERY HIGH RISK by the JPY-denominated debts.
At 20 % wide of exchange rate target zone, a IDR 100,000,000 outstanding loan principal on JPY-denominated debt jumping up to over IDR 200,000,000 in five year term despite of low interest rate offered by the JPY-denominated lenders. Bank Indonesia needs to compromise a "new medium term exchange rate target zone" to be jointly managed and maintained, probably 10 %, due to the fact that JPY-denominated debts are fueling Indonesian economy, and the Indonesian economy to downside risk in long term. If NOT ANTICIPATED, the next YENDAKA could be faced by Indonesia.
Do not over confidence with the current professionally managed medium and short term price stability levels, but the width (wide) of target zone is at VERY HIGH RISK by the JPY-denominated debts.