JAKARTA, Aug. 20 (Xinhua) -- Indonesia's central bank has launched Vastra, a new foreign exchange hedging instrument aimed at helping global investors manage currency risks on their portfolio investments in the country, a senior official said Wednesday.
"Vastra provides global investors with easier access to hedging transactions through overseas banks directly connected with partner banks in the domestic market," Bank Indonesia Deputy Governor Thomas Djiwandono told a press conference in Jakarta.
Under the scheme, hedging transactions can be conducted on a back-to-back basis through overseas and domestic partner banks without requiring investors to submit underlying documents.
Initially, Vastra will cover rupiah-denominated portfolio instruments, including government securities, Bank Indonesia rupiah securities and Bank Indonesia foreign exchange sukuk, with the scope potentially expanded in the future.
The facility supports forward, domestic non-deliverable forward and swap transactions, but excludes spot transactions.
Foreign exchange purchases against the rupiah under Vastra are capped at 100 percent of an investor's portfolio assets in Indonesia, while foreign exchange sales against the rupiah are capped at 25 percent.
Djiwandono said the facility will also allow investors to connect with Bank Indonesia's hedging instruments, including domestic non-deliverable forwards and central bank swaps. ■