Pertamina reduces dollar purchasing

State owned oil and gas firm PT Pertamina (Persero) said on Monday it will reduce its dollar purchasing by 50 percent to ease pressure on the local currency

Vice President for Corporate Communication Wianda Pusponegoro said until now, Pertamina had routinely purchased a significant amount of dollar from the market to finance its crude oil, oil fuel and LPG imports as well as its investment projects. On the other hand, much of the firm?s revenues are received in rupiah.

The state firm purchases the dollar from three state owned banks, namely Mandiri, BRI and BNI and routinely reports the purchasing to the central bank, Bank Indonesia, on a weekly and monthly basis. Pertaina has signed hedging deals with the three banks and received forex line facilities from the bank in a significant amount.

?The rupiah has been dynamically fluctuating against the dollar, continuing to depreciate, ending up now being undervalued. As part of risk mitigation efforts, Pertamina, which previously signed hedging deals, is ready to reduce its dollar purchasing by 50 percent from the normal transaction,? she said.

While reducing its dollar purchasing, Wianda said, Pertamina will continue meeting its payment obligation to business partners either in the rupiah or dollar. In order to fill the gap between the dollar demand and dollar purchasing, Pertamina will cooperate with the banking sector to utilize short-term credit facilities provided by the state owned, local and international banks on a trade financing scheme in meeting its payment obligation.

?Pertamina would thus utilize credit line commitment that it has secured rather than purchasing the dollar on the spot market,? she said.

Editing by Johannes Simbolon