Compare Saving Money at RI Bank & Singapore, Which Gains?

Businesspeople and exporters from Indonesia appear to prefer to save their money abroad when the US currency strengthens. This is a result of Indonesia's uncompetitive foreign currency deposit rates.

This decision also has an impact on Indonesia's dollar supply. The fact that the growth in foreign currency deposit collecting only reached 8.4% in September 2022 serves as evidence.

In actuality, the trade balance surplus increased by 58.83% during the period of January to September 2022, reaching US$ 39.87 billion.

In spite of the phenomena of a barrage of surpluses, Bahana Sekuritas Chief Economist Satria Sambijantoro observed that a significant portion of Indonesia's export revenues were deposited in Singaporean banks.

This is due to the fact that the bank in the bordering nation pays out more than 3% annually for time deposits made in US dollars. Much higher than the average for the country, which is only 0.38%.

The less strategic actions taken by BI caused this circumstance to arise. The decision to continue buying bonds in the primary and secondary markets resulted in excess liquidity even as BI increased interest rates by 125 basis points from August to October 2022.

The low loan-to-deposit ratio, which in turn lessens the incentives for banks to follow BI and hike interest rates, is one of the factors contributing to this surplus liquidity ratio, he told CNBC Indonesia.

Furthermore, Singapore's interest rate, which is comparatively higher, has led to a lack of dollar liquidity in domestic banks