The turmoil in global financial markets after monetary tightening by developed countries such as the United States caused foreign capital recorded outflow since the beginning of the year. Finance Minister Sri Mulyani confirmed this.
She conveyed this in a press conference of the Financial System Stability Committee (KSSK) Thursday (11/3/2022).
Not only Indonesia, but this situation is also actually experienced by almost all countries in the world, along with the tendency of investors to prefer a safe position amid high uncertainty.
According to Sri Mulyani, Indonesia itself is quite helpful because of the high prices of commodities such as coal and palm oil as well as iron and steel. Indonesia’s exports managed to hit record highs and pushed up a surplus in the trade balance.
“The positive trade balance contribution can reduce non-resident outflows which reached US$ 2.1 billion due to the very aggressive increase in interest rates in the US and uncertainty in global financial markets,” she explained.
Overall, Sri Mulyani said Indonesia’s balance of payments in the third quarter was still maintained. Even for the current account, a surplus is estimated.
“The current transaction in the third quarter is expected to return to a surplus, supported by the positive performance of the trade balance which posted a surplus of US$ 14.9 billion in the third quarter of 2022,” she concluded.
Previously, in the second week of last month, Bank Indonesia (BI) recorded a capital outflow from the Indonesian domestic market of Rp 4.22 trillion.
Head of the BI Communications Department Erwin Haryono said the outflow of foreign funds came from net selling on the Government Securities (SBN) market of Rp 3.34 trillion and net buying of Rp 790 billion on the stock market.
“Based on transaction data from October 10-13, 2022, non-residents in the domestic financial market sold a net Rp. 4.22 trillion,” he said in a written statement, Friday (14/10/).
Thus, from the beginning of 2022 until October 13, 2022, foreign funds leaving Indonesia amounted to Rp. 170 trillion in the SBN market. Meanwhile, foreign funds entering the stock market amounted to Rp 71.85 trillion.
As for the outflow of foreign funds in this week’s trading, Indonesia’s 5-year investment risk premium or credit default swaps (CDS) rose from the level of 154.43 bps on October 7, 2022, to the level of 160.24 bps as of October 13, 2022.
Meanwhile, the yield on the 10-year SBN rose to 7.36 percent, while the 10-year US Treasury bond yield rose to 3.944 percent.