Monday 31 August 2009

28-day SBI Bought in Large Quantity by Investors

Even though BI rate decreased, purchase of SBI by investors and banks was constant, even increased. Much of the investors’ attention was directed at 28-day SBI. Some commercial banks experienced quite significant over-liquidity. Facing this fact, Bank Indonesia re-accelerated tender of SBI and Syariah-based SBI by increasing total indicative target from Rp. 37.80 trillions on Wednesday (July 29) to Rp. 46.55 trillions on Wednesday (August 5).

Investors responded very positively. Total incoming bids reached Rp. 48.41 trillions or around 104.00% of target. Bid composition : Rp. 31.55 trillions for 28-day SBI; Rp. 12.83 trillions for 91-day SBI; Rp. 3.10 trillions for 182-SBI; and Rp. 0.93 trillions for Syariah-based SBI. But, total amount absorbed or contracted by Bank Indonesia only reached Rp. 44.32 trillions or around 95.21% of target or around 91.55% of total tender amount of Rp. 48.41 trillions. Bank Indonesia expected commercial banks to increase credit channeling, especially to medium-scale businesses that absorbed many laborers.

Some commercial banks experienced quite significant over-liquidity because they receive many deposits from investors. On the other hand, the banks were unwilling or were in difficulty to channel credit as a result of global economic crisis. Export from Indonesia to Europe and United States in first quarter of 2009 experienced a sharp decline and many industries operated under full capacity. Meanwhile, purchasing power of the society dropped sharply because many people spent their money on cost of education for their children. So, it was not surprising if SBI was eyed by investors. SBI was a very safe instrument, short-termed, liquid, and profitable. A source in Bank Indonesia told Business News.

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