Jakarta (VNA) – Recent interest rate hikes have driven approximately 9 billion USD in foreign portfolio inflows into Indonesia’s central bank securities and government bonds this year, according to an official from the country's central bank.
Bank Indonesia (BI) Senior Deputy Governor Destry Damayanti said most of the inflows had gone into BI Rupiah Securities (SRBI) and government bonds (SBN), reflecting continued confidence among international investors despite global economic uncertainty.
The stronger capital inflows came after Bank Indonesia raised its benchmark interest rate by a total of 100 basis points in May and June to 5.75%.
Tighter monetary policy aims to stabilise the rupiah, reduce volatility in financial markets and maintain the attractiveness of rupiah-denominated assets amid persistently high global interest rates..
The central bank also expanded liquidity support for the financial system to ensure sufficient funding for the economy.
According to Destry, liquidity injections increased from around 600 trillion IDR (33.43 billion USD) at the end of May to 1,000 trillion IDR by the end of June. The additional liquidity is expected to ease pressure on money and foreign exchange markets while supporting bank lending.
Indonesian authorities said the central bank is seeking to strike a balance between maintaining a prudent monetary policy to support the rupiah and ensuring adequate liquidity to sustain economic growth./.
