Indonesia needs more foreign capital to stabilize rupiah, economist says

Indonesia needs a significant increase in foreign capital inflow to stabilize the rupiah exchange rate, with the bond market identified as the primary gateway for such flows, according to Fakhrul Fulvian, Chief Economist at Trimegah Sekuritas Indonesia.

Fulvian noted that foreign investors have begun to re-enter the Indonesian bond market, but described the process as being in its "early stages." To attract sustainable capital, he emphasized that the Indonesian bond market must offer attractive yield rates that can compete with the prevailing high global risks.

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Foreign investors have indeed begun to buy Indonesian bonds again, but in my opinion, the process is still in its early stages.

While acknowledging Bank Indonesia's (BI) liquidity management tightening, including three benchmark interest rate hikes to 5.75 percent, as a sound foundation, Fulvian stressed the necessity of policy consistency. He stated that the "next challenge is no longer to stop the pressure on the rupiah, but to build investor confidence that the normalization process of the bond market will be consistently implemented."

Recent data from Bank Rakyat Indonesia (BRI) indicates foreign capital inflows of Rp 70.39 trillion in June 2026, partly driven by increased yields on Bank Indonesia Rupiah Securities (SRBI). Foreign capital through Government Bonds (SBN) reached Rp 21.03 trillion. However, the bid-to-cover ratios for both SBN and SRBI in June were below the 2025 historical average, suggesting limited aggregate demand from investors for domestic financial assets.

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The next challenge is no longer to stop the pressure on the rupiah, but to build investor confidence that the normalization process of the bond market will be consistently implemented until Indonesia once again becomes one of the main portfolio investment destinations in the region.