Opportunity Exchange

Bank Indonesia data shows the foreign exchange reserves reached 105.7 billion U.S. dollars. A historical record. That first layer of defense against this republic financial global crisis which may be repeated, as the monetary turmoil of 1997-1998 and 2008.

However, with the agreement of exchange reserves between countries (bilateral swap agreement / BSA) and similar exchanges with various countries in multilateral treaties, in fact Indonesia already has a second layer of defense. BSA provides an additional reserve of 18 billion U.S. dollars. As for the multilateral exchange of agreements that dimultilateralisasi Ciang Mai Initiative (CMIM) between ASEAN plus Japan, South Korea, and China reached 13.68 billion U.S. dollars.

Thus, the total defense Indonesia currently reached 137.38 billion U.S. dollars. It does not include reserves that can be obtained from the International Monetary Fund (IMF). However, the IMF become an alternative source of foreign exchange reserves are avoided by most ASEAN countries of post-monetary crisis of 1997-1998. Countries in Southeast Asia trauma to the IMF.

Foreign exchange reserves classified as economic assumptions that are not too popular among middle to lower layers of society. The best example of the use of reserves to the national economy is China. This country has huge foreign reserves, about 2.8 trillion U.S. dollars as of January 2011, so room to manage the yuan exchange rate is very broad.

Pressured by all developed countries was to strengthen the yuan, the Chinese Government unmoved. That attitude carried out to protect the export-based industries. The weaker yuan, the cheap Chinese goods.

The same situation is also experienced by Indonesia and China. Indonesia’s trade balance still in deficit against China. As of late 2010, Indonesia exported goods to China reached 49.2 billion U.S. dollars. Chinese goods are exported to Indonesia 52 billion U.S. dollars. Indonesia’s trade balance deficit of 2.8 billion U.S. dollars. It notes China. From Indonesia’s record, the deficit reached 5 billion-7 billion U.S. dollars.

This condition is exacerbated the tendency of the yuan weakened the rupiah. As a result, Indonesia produced similar goods lose competitiveness in terms of the sale price. As of December 26, 2010, the yuan equivalent of USD 1359.34. However, as of 3 April 2011 yuan weakened to the level of USD 1325.58. Weakened 2.48 percent.

The condition of the rupiah against the yuan as it makes goods produced in Indonesia will be unable to compete even in their own market. However, unheard of monetary measures that can be done by Bank Indonesia for a little help Indonesia and China trade war is.

Foreign reserves in U.S. dollars are relatively large, the strengthening of the rupiah over the U.S. dollar and U.S. dollar are likely to strengthen against the yuan in fact can be exploited to influence the exchange rate of yuan against the rupiah. It was by using a simple mechanism, namely arbitration triangle (triangular arbitrage).

Mechanism commonly used in these foreign exchange markets could open opportunities for the yuan strengthened slightly against the rupiah. Indeed, the flow of foreign exchange from and to China is very rigid, but this step can be tried to slightly reduce the burden on our employers who are dealing directly with Chinese goods that supercheap.