Bank Indonesia (BI) launched the DNDF market in 2018 to create a parallel to Singapore's non-deliverable forward market for the rupiah as an alternative hedging instrument against the U.S. dollar for businesses and foreign investors.
The Singapore's NDF market has often been blamed for speculation against the rupiah.
The domestic market currently trades contracts with one month and three month maturities, with average trading volume of about $100 million to $150 million a day, mostly for the shorter tenure and excluding the central bank's auctions, said Donny Hutabarat, BI's head of money market development.
"This is a matter of developing the characteristics of the users. Active users with real demand, and book positions in the banks will need the three to 12 month (instruments)," Hutabarat said.
BI is also looking to add Malaysian ringgit, Thai baht and Japanese yen into the DNDF market as Indonesia has local currency settlement agreements with those countries, he said. He did not provide a timeline for the launch of non-U.S. dollar instruments.
Indonesia and China are currently finalising a local currency settlement agreement, he said.
(Reporting by Tabita Diela and Gayatri Suroyo; Editing by Simon Cameron-Moore)