Are US Bond Yields Behind the Dollar\u2019s Strength?<\/p>\n
Reporter<\/p>\n
September 23, 2026 | 08:28 pm<\/p>\n
TEMPO.CO, Jakarta - Bank Indonesia Governor Destry Damayanti said the\nsurge in U.S. Treasury bond yields has made global investors cautious\nabout entering developing countries\u2019 financial markets.<\/p>\n
\u201cThis has led to the continued strength of the U.S. dollar index\nagainst both developed and developing countries,\u201d said Bank Indonesia\nGovernor Destry Damayanti in a virtual press conference on Wednesday,\nSeptember 23, 2026.<\/p>\n
The 10-year U.S. Treasury yield reached 5.02 percent as of September\n15, 2026, the highest level since October 2023. On Wednesday, September\n23, 2026, Trading Economics data recorded the U.S. government bond yield\nat 4.97 percent. Market expectations of a Fed Funds rate hike and the\nU.S. government\u2019s large budget deficit influenced the increase in U.S.\nyields.<\/p>\n
On the same occasion, Destry announced that Indonesia\u2019s balance of\npayments showed a US$0.12 billion surplus in July 2026, after a US$0.45\nbillion deficit in June.<\/p>\n
Meanwhile, Bank Indonesia recorded a net inflow of US$0.4 billion in\nthe third quarter until September 21, 2026. According to Destry, the net\ninflow was supported by global government bond issuances, as well as\ninflows in government securities (SBN). Indonesia\u2019s foreign exchange\nreserves at the end of August 2026 stood at US$146.5 billion, equivalent\nto financing for 5.4 months of imports or 5.3 months of imports and\nforeign debt payments, exceeding the international adequacy standard of\naround 3 months of imports.<\/p>\n
Destry stated that BI will strengthen its policy to stabilize the\nrupiah\u2019s exchange rate amid high uncertainty in global financial\nmarkets. She stated that Bank Indonesia will optimize all monetary\ninstruments, including expanding incentive policies to increase foreign\nportfolio investment inflows, strengthening rupiah exchange rate\nstability, and accelerating the deepening of the money market and\nforeign exchange market.<\/p>\n
Bank Indonesia noted the strengthening of the rupiah exchange rate\nfrom August to mid-September 2026. This strengthening resulted from a\nmix of monetary policies. These policies included expanding underlying\ntransactions for foreign funding. These transactions were eligible for\nincentives that reduced the premium. The incentives were for hedged\nbuy-sell swaps with Bank Indonesia and for domestic non-deliverable\nforwards.<\/p>\n
However, Bank Indonesia also noted the rupiah\u2019s weakening amid global\nuncertainty. As of September 22, 2026, the rupiah was worth Rp 17,855\nper U.S. dollar, a 0.78 percent decrease since the end of August\n2026.<\/p>\n
\u201cBank Indonesia estimates that the rupiah exchange rate will remain\nstable, supported by the commitment of Bank Indonesia, attractive\nyields, controlled inflation within the target, and a consistently good\ndomestic economic outlook,\u201d said Destry.<\/p>\n
Read: Bank Indonesia Vows \u2018All Out\u2019 Efforts to Keep Rupiah Stable<\/p>\n
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