Just attend a workshop on Portfolio Management by RBA in my office. They touch a little bit on FX swaps as the liquidity management tools for domestic market operation. They said that there will be no impact on the FX market, and only interest rate market will be effected. Really??
Well, one thing is true that FX swap is a money market instrument, not a fx market instrument. You buy (in this case you borrow) a particular currency, in an exchange of selling (lending) other currency, and at the time of maturity, you will get the same amount, at the same level.
They said that $10 billion worth of FX Swap will not move the FX market, and they've done that. Wow.. how deep is the market? I have to check it. But What I am sure is that won't be the case with Indonesia. Buying (borrowing) or selling (lending) rupiah means increasing supply and demand, and increasing turnover. With $3 billion per day worth of FX transaction in Indonesia, I think FX Swap will certainly move the market.
Will come back to you on that...
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