The financial market in Indonesia is experiencing a gradual relief from previous pressures, resulting in a resurgence of the rupiah’s value, a decrease in yields on government bonds (SBN), and a notable trend of foreign capital flowing into the country.
Finance Minister Sri Mulyani Indrawati noted that the impact of global conditions on financial and bond markets was keenly felt in September and October. However, the situation is now showing signs of easing. This is evident in the increased capital inflows, the correction in SBN yields, and the resilience of the rupiah, which has managed to appreciate even though it remains below 2%.
As of November 22, 2023, the year-to-date data indicates a 1.88% appreciation of the rupiah against the US dollar. Sri Mulyani pointed out that similar pressures on currency exchange rates have been experienced in various countries, primarily due to the strengthening US dollar index resulting from a significant rise in the Fed’s interest rates.
The surge in interest rates in the US has prompted capital outflows from many developing countries, Indonesia included. Nevertheless, Indonesia is currently benefiting from positive capital inflows, maintaining a net positive status year-to-date, particularly in SBN purchases.
Sri Mulyani revealed that, until November 22, 2023, there has been a total capital inflow of Rp45.01 trillion in the domestic financial market. Notably, the SBN market is witnessing positive trends amid the ongoing market volatility. In November 2023 alone, there was an inflow of Rp12.69 trillion, marking a recovery after experiencing outflows from July to October.
The Ministry of Finance’s year-to-date records show a capital inflow in the SBN market amounting to Rp60.88 trillion. In contrast, during the same period, there was an outflow in the stock market totaling Rp15.87 trillion.
Concurrent with these developments, the yield on 10-year Government Bonds (SUN) has seen a decline, moving from 7.09% on October 31, 2023, to 6.64% on November 22, 2023.
Sri Mulyani emphasized that the sustained flow in SBN yields in rupiah indicates a renewed strengthening, or in this case, a decline compared to the pressure observed in late September and October. However, she cautioned that ongoing global dynamics and uncertainties still warrant close monitoring in the future.