The Bank of Indonesia (BI) has reported that foreign capital outflow from Indonesia’s financial markets in the fourth week of March 2023 reached IDR 140 billion.
“Based on transaction data from March 20 to 21, 2023, non-residents in the domestic financial market had a net sale of IDR 140 billion,” said Erwin Haryono, Head of the BI Communications Department on Friday (24/3/2023).
Erwin explained that the amount consisted of a net sale of IDR 50 billion in the government securities market (SBN) and a net sale of IDR 90 billion in the stock market.
Furthermore, during 2023, or the period up to March 21, 2023, foreign capital inflows were recorded at IDR 41.98 trillion in the SBN market and IDR 1.07 trillion in the stock market.
Along with these developments, BI also reported that Indonesia’s 5-year investment risk premium (credit default swap/CDS) rose to a level of 104.21 bps per March 23, 2023, from 103.66 bps per March 17, 2023. The 10-year SBN yield on Friday morning (24/3) was recorded at a level of 6.86%, down from 6.88% at the end of Tuesday (21/3).
Meanwhile, the exchange rate of the rupiah at the opening of trading on Friday morning (24/3) was at the bid level of IDR 15,140 per US dollar. On Tuesday (21/3), the rupiah closed at the bid level of IDR 15,340 per US dollar.
The rupiah at the close of trading today strengthened to the level of IDR 15,153 per US dollar, influenced by sentiment toward The Fed’s dovish signals on interest rate policy. The rupiah strengthened by 1.25% amid a 0.01% increase in the US dollar index to 102.54.
“BI will continue to strengthen coordination with the government and relevant authorities and optimize policy mix strategies to maintain macroeconomic stability and the financial system to support further economic recovery,” said Erwin.
According to Paul R. Krugman and Maurice Obstfeld, Capital Outflow is the process of funds or capital outflow from domestic to foreign, either directly (direct investment) or indirectly (indirect investment). Capital Outflow in the short term is also called capital flight.
Capital Outflow in Indonesia is a common occurrence and not something that should be exaggerated. However, capital outflow can be dangerous if it consistently happens, meaning there is a condition where capital owners are no longer optimistic about putting their money in a certain country.
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