JAKARTA, 08 May 2005 - Indonesia’s central bank absorbed 1.72 trillion rupiah ($181.5 million) from the financial system on Friday, by offering a six-day deposit at 5.75 percent, in an effort to help support the rupiah. This is the third time Bank Indonesia has used the deposit facility, which it described as a fine tuning instrument, since it was introduced on April 26.

The facility, offering deposit periods from overnight to 14 days, absorbs excess rupiah from the financial system to help prop up the currency, which fell to a three-year low around 9,800 per dollar last week. The currency fell partly on inflation worries and because of dollar demand to pay for oil imports. The rupiah has since strengthened and was trading around 9,470 per dollar at midday on Friday.

The deposit facility adds to the central bank’s relatively limited number of tools to absorb cash, which include a seven-day intervention facility, and one- and three-month central bank certificates (SBIs).

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