The Rupiah Has Not Returned to Levels Below IDR 16,000
Foreign capital inflows (portfolio) have returned to Indonesia with a larger value in the past week. According to Bank Indonesia's (BI) official statement yesterday, during the year 2024 based on settlement data until Tuesday, May 7, 2024, non-residents (foreigners) made a net sale of Rp46.61 trillion in the government securities (Surat Berharga Negara) market. However, at the same time, they also made a net purchase of Rp3.83 trillion in the stock market and a net purchase of Rp31.43 trillion in the Indonesian Rupiah Securities (SRBI) market.
Meanwhile, during the two working days of May 6-7, 2024, non-residents in the domestic financial market made a net purchase of Rp4.04 trillion. This consisted of a net purchase of Rp2.36 trillion in the government securities market, a net sale of Rp1.90 trillion in the stock market, and a net purchase of Rp3.58 trillion in the SRBI market. Regarding foreign capital flows during the second week of May 2024, the 5-year Indonesian investment risk premium or CDS (credit default swap) as of May 7, 2024, was recorded at 69.91 bps, down from 70.69 bps on May 3, 2024.
Furthermore, at the closing of the market on Tuesday, May 7, 2024, the rupiah strengthened to a level of Rp16,040 per US dollar in the Jakarta Interbank Spot Dollar Rate (JISDOR) of Bank Indonesia, the 10-year government securities yield decreased to 6.90%, DXY strengthened to 105.41, and the 10-year US Treasury Note yield decreased to 4.46%.
DXY or the Dollar Index is an index that shows the movement of the dollar against 6 other major currencies (EUR, JPY, GBP, CAD, SEK, CHF). Meanwhile, UST or US Treasury Note is a government debt security issued by the US government with a tenor of 1-10 years.
At the market opening on Wednesday, May 8, 2024, the rupiah weakened to a level of Rp16,080 per US dollar, before strengthening again to Rp16,047 but slightly weaker than the closing on Tuesday, May 7, 2024. Meanwhile, the 10-year government securities yield rose to 6.
Previously, Governor of Bank Indonesia Perry Warjiyo was confident that the rupiah would continue to strengthen until the end of 2024, reaching a level below Rp16,000. He made this statement during a press conference of the Financial System Stability Committee (KSSK) in Jakarta last week. The reasons behind this are the increase in BI rate and SRBI, which attract foreign capital inflows, as seen from the continuously rising net purchase data during the first two weeks of May. Another reason is the strengthening economic prospects of Indonesia, with inflation being controlled within the target range of 2.5% plus or minus 1%.
