Upper Threshold for Foreign-Currency Transactions Revised

Bank Indonesia (“BI”) has issued Regulation No. 17/15/PBI/2015 (“Amendment”) in order to amend BI Regulation No. 16/16/PBI/2014 on Foreign Currency Against Rupiah Transactions Between Banks and Domestic Parties (“2014 Regulation”). [1] The ultimate aim of the Amendment is to improve the stability of rupiah exchange rates by stimulating foreign-currency transactions within the domestic market through banks.With this purpose in mind, the Amendment changes the upper-threshold level for foreign currencies that can be purchased or sold between domestic customers and banks via spot or derivative transactions (e.g. forwards, swaps, or options).The Amendment is relevant to both banks and to the general public (domestic parties).New Upper ThresholdsThe new upper threshold for customers selling foreign currency through forward transactions to banks is now set at USD 5 million or its equivalent per customer per transaction. [2] Previously, the upper threshold for this transaction was set at USD 1 million or its equivalent per customer per transaction. [3] The Amendment does not alter the upper threshold for other types of transactions, such as the purchase of foreign currencies by customers through derivative transactions (which remains set at USD 100,000), the sale of foreign currency by customers through option transactions (USD 1 million), and the purchase of foreign currency by customers through spot transactions (USD 100,000). [4] Mandatory Underlying TransactionsThe 2014 Regulation allows for customers to purchase or sell foreign currency beyond the upper threshold, provided that the process is supported by an underlying transaction. [5] Such underlying transactions can take the form of: