Foreign capital pouring in, Rupiah continues to strengthen
The rupiah exchange rate against the US dollar (USD) has continued to strengthen due to various sentiments, including the expectation that the US Federal Reserve (Fed) will lower its benchmark interest rate in the near future.
This prediction has triggered a surge of foreign portfolio capital inflows into developing countries, including Indonesia, which offer more attractive bond yields.
At the close of trading on Thursday (September 5, 2024), according to the official statement from Bank Indonesia, the rupiah exchange rate was at the bid level of Rp15,395/USD.
Concurrently, the yield on the Indonesian government's 10-year sovereign bonds (SBN) remained relatively stable at 6.63%.
Similarly, the US dollar index (DXY), which measures the US dollar against a basket of six major global currencies, was also relatively stable at 101.11.
In contrast, the yield on the 10-year US Treasury note declined to 3.727%.
At the market open on Friday (September 6, 2024), the rupiah exchange rate in the spot market (Jisdor) continued to strengthen to the bid level of Rp15,380/USD, despite the 10-year SBN yield declining to 6.59%. By the close of trading on Friday, the rupiah had strengthened further to Rp15,377/USD.
According to transaction data from September 2-5, 2024, non-resident or foreign investors recorded a net sell of Rp2.49 trillion, comprising a net buy of Rp2.65 trillion in the SBN market, a net buy of Rp2.24 trillion in the stock market, and a net sell of Rp7.38 trillion in Bank Indonesia's Rupiah Securities (SRBI).
However, throughout 2024 up to September 5, 2024, non-resident investors recorded a net buy of Rp28.80 trillion in the stock market, Rp11.15 trillion in the SBN market, and Rp186.92 trillion in SRBI.
During the second half of 2024 alone (July 1 - September 5, 2024), non-resident investors recorded a net buy of Rp28.46 trillion in the stock market, Rp45.11 trillion in the SBN market, and Rp56.57 trillion in SRBI.
