SINGAPORE: The central banks of Singapore and Indonesia on Thursday (Nov 5) announced a one-year extension of a US$10 billion (S$13.8 billion) bilateral financial arrangement.
The extension "will support monetary and financial stability in both countries amid the COVID-19 pandemic", said the Monetary Authority of Singapore and Bank Indonesia in a joint media release.
Singapore Prime Minister Lee Hsien Loong and Indonesia President Joko Widodo have endorsed the extension, the two banks said.
The arrangement includes two agreements - a local currency bilateral swap agreement (LCBSA) that allows for the exchange of local currencies between the two central banks of up to US$7 billion; as well as a bilateral USD repurchase agreement of US$3 billion.
An LCBSA is a common form of bilateral financial cooperation between central banks.
Through such an agreement, a central bank can obtain foreign currency from another central bank in exchange for domestic currency at the prevailing exchange rate, with the agreement to reverse the transaction at the same exchange rate on a specified maturity date.
The bilateral financial agreement was first signed in November 2018 and was also extended in November 2019 for another year.