Indonesia's Net Investment Liabilities Fall Amid Stronger US Dollar

Indonesia's International Investment Position (IIP) saw a significant decrease in net liabilities, falling by US$45.8 billion to US$227.6 billion by the end of the first quarter of 2026. This marks a notable shift from the US$273.4 billion recorded at the close of the previous quarter.

The decline in net obligations was primarily influenced by a more substantial reduction in the Financial Liabilities to Non-Residents (FLNR) position, which outweighed the decrease in Foreign Financial Assets (FFA). Indonesia's FFA position stood at US$556.7 billion in Q1 2026, a slight 0.4 percent drop from US$559.1 billion in Q4 2025. Bank Indonesia attributed this decrease to the need for foreign exchange for government external debt payments and the rupiah's stabilization policy amidst global financial market uncertainty.

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Indonesia's FFA position decline was mainly affected by the decrease in foreign exchange reserves in line with the need for foreign exchange for government external debt payments and the rupiah exchange rate stabilization policy in response to the high uncertainty in the global financial market.

Further impacting the FFA position were weakening asset prices and a strengthening U.S. dollar against currencies where Indonesian assets are held. Meanwhile, the FLNR position experienced a more pronounced decrease of 5.8 percent, shrinking from US$832.6 billion to US$784.3 billion. This reduction was mainly due to the diminished value of domestic financial instruments, even as direct investment performance remained positive. Portfolio and other investments also declined, partly due to the repayment of private sector bonds and maturing foreign loans.

Despite these fluctuations, Bank Indonesia considers the IIP's development in Q1 2026 to be well-maintained, contributing to the nation's external resilience. This is reflected in the IIP ratio to Gross Domestic Product, which fell to 15.5 percent from 18.9 percent. The structure of Indonesia's IIP obligations remains dominated by long-term derivative instruments, primarily direct investments, accounting for 92.5 percent.

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Bank Indonesia views the development of Indonesia's IIP in Q1 2026 as being well-maintained, thus supporting external resilience.