Bank Indonesia Reports Foreign Capital Outflow of Rp 950 Billion in Three Days

Bank Indonesia (BI) reported that foreign capital outflow from Indonesia’s financial markets has reached Rp950 billion in just three days from May 2 to May 5, 2023.

This announcement was made by the Head of BI’s Communication Department, Erwin Haryono, in an official statement on Friday, May 5th, 2023.

According to Erwin, “Based on transaction data from May 2 to May 5, 2023, non-residents in the domestic financial market had a net selling position of Rp950 billion.”

Erwin explained that this amount was made up of net selling of Rp550 billion in the Government Securities (SBN) market and net selling of Rp400 billion in the stock market.

On the other hand, based on settlement data for this year up until May 5th, 2023, foreign capital inflow into Indonesia’s financial markets has reached Rp63.2 trillion in the SBN market and net buying of Rp16.25 trillion in the stock market.

In line with these developments, BI reported that Indonesia’s 5-year investment risk premium (credit default swap/CDS) had risen to 99.04 basis points (bps) as of April 28th, 2023.

In addition, Erwin also stated that as of May 5th, 2023, the rupiah had closed at Rp14,675 per US dollar. The yield of the 10-year SBN had fallen to 6.41 percent, while the yield of the US Treasury’s 10-year had fallen to 3.379 percent.

Erwin stated that the central bank would continue to strengthen coordination with the government and relevant authorities to optimize policy mix.

“Bank Indonesia continues to strengthen coordination with the government and relevant authorities as well as optimize policy mix strategies to maintain macroeconomic and financial system stability in supporting further economic recovery,” he said.

The report of foreign capital outflow in such a short period has raised concerns over Indonesia’s financial market stability and economic recovery prospects.

The rising investment risk premium could deter foreign investors from investing in the country, while the falling yield could signal lower investor confidence in the government’s ability to manage the economy.

Despite these challenges, BI’s commitment to maintaining macroeconomic and financial system stability provides hope for the country’s economic recovery.