A rule proposed by Indonesia that will require companies to bring back their foreign exchange earnings will not raise their transaction costs, according to the country’s central bank, The Wall Street Journal reports. Bank Indonesia is set to ask all companies to put their foreign income in domestic banks to increase foreign currency liquidity in the banking system.
Firms will not be compelled to convert the funds into rupiah, and there will be no requirement on how long they must keep their dollars in the domestic banking system. Companies are worried their transaction costs will rise if they must settle their trades via commercial banks in Indonesia rather than through offshore banks.
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