BNI, BI explain DNDFs, LCS in seminar

Jakarta, February 27, 2019 – Publicly listed state lender PT Bank Negara Indonesia (BNI) has held the 2019 Economic Outlook event to analyze the latest global and domestic economic conditions. The event explored several economic issues and looked at new policies from Bank Indonesia that affect businesspeople. The theme of the event was Raising Awareness of Domestic Non-Deliverable Forward (DNDF) Transactions and Local Currency Settlements (LCS).

The seminar, held in Jakarta on Wednesday, was opened by BNI institutional relations director Adi Sulistyowati and attended by 60 exporters and importers of corporate clients. The participants enthusiastically listened to explanations from speakers, including Bank Indonesia market development director Yoga Affandi, who presented the DNDF transaction material and LCS transaction scheme. In addition, material on macroeconomic conditions was delivered by BNI chief economist Kiryanto. The material for the DNDF and LCS transaction mechanism was delivered by the BNI Treasury Division's derivative and structured product group head, Ikhwani Fauzana.

DNDFs are standard foreign exchange derivative transactions against the rupiah in the form of a forward transaction with a fixing mechanism carried out in the domestic market. The LCS mechanism came from a cooperation agreement involving Indonesia, Malaysia and Thailand to increase the use of local currencies, namely the rupiah, ringgit and baht, in payment transactions for goods and services involving the three countries.

DNDF transactions and the LCS transaction scheme are part of efforts by BI to maintain rupiah stability. DNDF products were launched at the end of 2018 and the LCS transaction mechanism was launched in the first quarter of 2018. With the launch of the new product by BI, it is key for BI to also raise further awareness on it so that exporters and importers can reap the full benefits of it.

Adi Sulistyowati revealed that BNI was committed to helping maintain the stability of the rupiah by, among other measures, providing support to BI in disseminating information and marketing DNDF transactions and LCS transaction schemes. The goal is for the product to be used more by market players, including exporters and importers who are BNI customers. "One of BNI's programs supports active DNDF transactions and the LCS transaction scheme by bringing the theme to the 2019 Economic Outlook event and Customer Gathering held by BNI," he said.

On the occasion, BNI also gave several awards to several companies. Pertamina was awarded for most activity in hedging transactions in 2018, PLN was awarded for having the most local currency settlements and Sinar Mas Agro Resources & Technology was awarded for being the most active in corporate forex transactions in 2018.

Interest from exporters and importers toward LCS is quite high, as seen in their total LCS transactions with customers in 2018 (or the first year the LCS scheme was launched), amounting to Rp 1.15 trillion. BNI recorded an increase in the volume of foreign exchange transactions with customers by 14.04 percent year-on-year (yoy) in 2018. Likewise, the volume of hedging transactions with BNI customers in 2018 increased 27.53 percent yoy.


News Archive