Indonesia Records $8.5 Billion Net Foreign Portfolio Inflow in Q2 2026

Foreign capital flowed into Indonesian government bonds and central bank rupiah securities, resulting in a net portfolio inflow of $8.5 billion in Q2 2026. This is attributed to a recovery in demand for emerging market bonds due to interest rate hikes and a decrease in currency hedging costs. Bank Indonesia stated that the foreign portfolio funds were primarily focused on government bonds (SBN) and central bank rupiah securities (SRBI). As of July 20, there was an additional net inflow of $100 million centered around SBN in the early part of Q3. Bank Indonesia announced plans to increase incentives for foreign capital inflows and rupiah stabilization following the interest rate hike. To lower the currency hedging costs for foreign investors, the swap sell hedge incentive was raised to 12.5%, and a 15% incentive was introduced for DNDF sell hedge transactions. The holdings of SRBI by non-residents increased from 238.09 trillion rupiah on June 15 to 288.65 trillion rupiah on July 20. Foreign exchange reserves were recorded at $145.3 billion at the end of July, with Bank Indonesia stating that the government's global bond issuance and foreign capital inflows contributed to maintaining these reserves. However, net foreign purchases in July decreased to $2.03 billion, with $400 million flowing out of Indonesian bonds. Concerns over the independence of the central bank grew following the resignation of Governor Perry Warjiyo, leading to a depreciation of the rupiah.

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