Under a Bank Indonesia (BI) regulation dated May 5 and effective from March 5, 2018, no one except banks and licensed money changers will be allowed to bring in banknotes equivalent to 1 billion rupiah (£58,137).
At present, there is no cap on foreign banknotes carried in, though people bringing in the equivalent of more than 100 million rupiah have to declare the amount.
Budianto, BI’s executive director of foreign exchange management, said that after the rule takes effect, anyone who brings in more than the allowed amount with a license will have the notes confiscated by the customs office.
Until the regulation was prepared, Indonesia had “no controlling instrument” on the flow of foreign banknotes.
“The problem is when demand for foreign banknotes increases, it could create pressure on the rupiah. And it has psychological effect too,” Budianto told a briefing on the new regulation.
He also said the measure should strengthen BI’s efforts to ban the use of foreign currency in domestic transactions.
The rupiah, which in the past has weakened significantly, has gained more than 1 percent against the dollar so far this year.