JAKARTA – The Financial Services Authority (OJK) has confirmed that the national banking sector’s direct exposure to exchange rate risk remains low, despite the rupiah nearing Rp17,000 per US dollar.

Dian Ediana Rae, Executive Head of Banking Supervision at OJK, stated that as of February 2025, the net foreign exchange position (PDN) of banks stood at 1.55%, well below the maximum threshold of 20%.

“This indicates that banks have very minimal direct exposure to exchange rate risk,” Dian said during the Monthly Board of Commissioners Meeting (RDKB) press conference on Friday (April 11).

She added that the rupiah's depreciation would not significantly impact bank balance sheets. This is because most foreign currency (FX) loans are provided to debtors who earn revenues in FX, particularly exporters.

“This condition is referred to as naturally hedged, meaning it does not actually cause substantial volatility,” she explained.

Dian also stated that the current net foreign exchange position of banks is long, meaning banks hold more assets in foreign currency than liabilities.

Thus, when the rupiah depreciates, the value of bank assets actually increases, which can ultimately have a positive impact on bank profitability.

Furthermore, OJK reported that FX loan growth as of February 2025 reached 16.30% year-on-year (YoY), surpassing FX Third-Party Fund (DPK) growth, which stood at 7.09% (YoY).

This has led to an increase in the foreign currency loan-to-deposit ratio (LDR) to 81.43%, compared to 74.98% last year. (DK/LM)