Jakarta (ANTARA) \u2014 Bank Indonesia (BI) has again increased incentives\nfor hedging through its Domestic Non-Deliverable Forward (DNDF)\ninstrument to attract foreign capital inflows and maintain rupiah\nexchange-rate stability.<\/p>\n
More specifically, the incentive for DNDF hedging with BI applies to\nunderlying foreign funding transactions, including portfolio inflows,\nbanks\u2019 offshore borrowing and foreign direct investment (FDI). The\npremium reduction has been raised to 40 per cent for six-month tenors,\nfrom 25 per cent, and to 45 per cent for 12-month tenors, from 30 per\ncent.<\/p>\n
\u201cOur focus is on how we can bring those inflows back. So the policy\nis more targeted,\u201d BI Governor Destry Damayanti said at a press\nconference in Jakarta on Wednesday.<\/p>\n
BI will also continue incentives for conventional buy-side hedging\nswaps with the central bank for underlying foreign funding transactions,\nincluding portfolio inflows, banks\u2019 offshore borrowing and FDI. These\ncomprise premium reductions of 15 per cent for three-month tenors, 20\nper cent for six-month tenors and 25 per cent for 12-month tenors.<\/p>\n
Incentives for Local Currency Transactions (LCT) with partner\ncountries will also continue.<\/p>\n
LCT incentives support the diversification of foreign-exchange\ntransactions by adding 10 per cent to the premium for conventional\nsell-side hedging swaps with BI in connection with international trade\nand investment, and reducing by 10 per cent the premium for DNDF hedging\nwith BI for international trade and investment.<\/p>\n
BI has implemented LCT cooperation with seven partner countries:\nJapan, South Korea, Malaysia, Singapore, Thailand, China and the United\nArab Emirates.<\/p>\n
Destry said the central bank\u2019s current policy was more targeted at\nattracting foreign capital inflows, and BI would continue to optimise\nthe incentives available to investors.<\/p>\n
The hedging incentives, introduced in June 2026 and refined several\ntimes since, are now producing results, she said, with foreign capital\ninflows totalling US$9.9 billion as of 20 October 2026.<\/p>\n
\u201cWhat we are doing is optimising the incentives we provide to\ninvestors who come in, bringing in inflows or placing funds to buy\nIndonesian portfolios, including government bonds, SRBI [Bank Indonesia\nRupiah Securities], as well as loans and other instruments,\u201d she\nsaid.<\/p>\n
She hopes the larger incentives will lead to repricing of domestic\nassets, making their yield spread against foreign assets such as US\nTreasuries more attractive.<\/p>\n
\u201cThat is what we are doing. For now, our focus is targeted at\nbringing in those inflows,\u201d Destry said.<\/p>\n
At its 20\u201321 October 2026 Board of Governors Meeting, BI decided to\nkeep the BI-Rate at 5.75 per cent and the lending facility rate at 6.50\nper cent. It raised the deposit facility rate to 5.00 per cent.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/bi-raises-hedging-incentives-again-for-dndf-instruments-1792576466", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }