Bank Indonesia (BI) has recently reported significant foreign capital inflows into the domestic financial market, amounting to Rp7.10 trillion during the second week of July 2023. This surge in investment demonstrates the confidence of non-resident investors in Indonesia’s financial landscape.
According to Erwin Haryono, the Head of BI’s Communication Department, the data reveals a net purchase of Rp7.10 trillion by non-residents in the domestic financial market. Specifically, Rp6.54 trillion flowed into the government securities market, while Rp560 billion entered the stock market.
These robust capital inflows contribute to the steady growth of foreign investment in Indonesia. The cumulative figures for the year 2023, up until July 13, are notable, with Rp81.21 trillion recorded in the government securities market and Rp14.59 trillion in the stock market.
The positive investment climate is also reflected in the declining investment risk premium. The 5-year Indonesian investment risk premium, as measured by the credit default swap (CDS), decreased from 88.11 basis points on July 7, 2023, to 80.26 basis points on July 13, 2023. This reduction indicates the increasing confidence of international investors in Indonesia’s economic stability.
In addition, the yield on 10-year government securities remained stable, with a slight decrease from 6.16 percent on July 13 to 6.13 percent on July 14. This stability further enhances the attractiveness of government securities as a long-term investment option.
The positive market performance extends to the foreign exchange market as well. The Indonesian rupiah opened stronger at a bid level of Rp14,950 per US dollar on July 14, compared to Rp14,965 per US dollar on July 13. This strengthening of the rupiah demonstrates the resilience and confidence in Indonesia’s currency amidst foreign capital inflows.
Erwin Haryono emphasizes that Bank Indonesia will continue to strengthen coordination with the government and relevant authorities. This collaborative effort aims to optimize a mix of policies, ensuring macroeconomic stability and a sound financial system.
These measures will support the ongoing economic recovery and further enhance Indonesia’s attractiveness as an investment destination.
The robust foreign capital inflows serve as a positive indicator for Indonesia’s financial market, reflecting the favorable investment climate and the confidence of international investors. As Indonesia continues its journey towards economic growth and stability, the sustained interest from foreign investors will play a vital role in fostering further development and prosperity.