BI backs Panda Bond issuances to deepen the foreign exchange market
This is to improve renminbi liquidity in the onshore market, and we also hope this will create a new structure to reduce the rupiah’s volatility against the dollar.
Jakarta (ANTARA) - Bank Indonesia (BI) is encouraging the issuance of renminbi-denominated financial instruments, including Panda Bonds and Dim Sum Bonds by the Indonesian government, to support the deepening of the domestic foreign exchange market.
BI Deputy Governor Thomas Djiwandono, at a press conference following the BI Board of Governors’ Meeting in Jakarta on Wednesday, said that issuing Panda Bonds and Dim Sum Bonds can serve as an alternative Renminbi investment and simultaneously strengthen the liquidity of that currency in the domestic market.
Thomas added that, on the other hand, BI is also leveraging the Indonesian Rupiah Securities (SRBI) and supporting the provision of Government Securities (SBN) in the offshore market as an alternative for placing rupiah liquidity abroad.
BI is accelerating the implementation of money market and FX market deepening in line with the Money Market Deepening Blueprint (BPPU) 2030 through expanding offshore CNH transactions against the rupiah using spot and swap instruments in the domestic foreign exchange market.
This step is in line with the growing use of local currency transactions (LCT) in settling Indonesia–China trade and investment transactions.
Regarding participation, Thomas said, BI also promotes the Renminbi Clearing Bank initiative to increase the capacity of renminbi flows from China to Indonesia as a liquidity provider for the Chinese currency.
Under this scheme, renminbi liquidity providers would gain direct access to the People’s Bank of China (PBOC) and the China Interbank Market.
“This is to increase renminbi liquidity in the onshore market, and we also expect it will create a new structure to reduce the rupiah’s volatility against the dollar,” said Thomas.
Continuing the drive to deepen money and FX markets to support rupiah stability, BI broadens banks’ participation in offshore NDF selling of foreign currency against the rupiah in overseas markets for PUVA primary dealers meeting BI’s requirements.
Furthermore, to support stabilisation of the rupiah’s exchange rate, BI also strengthens FX transaction policy through adjustments to the cash FX purchase threshold against the rupiah without an underlying, increases the DNDF/Forward sell threshold, and raises the thresholds for buy and sell swaps, effective from April 2026.
From June next year, the policy will be strengthened with a reduction of the cash FX buy threshold against the rupiah without underlying to USD 25,000 per participant per month.
For information, the Panda Bonds are being prepared by the Indonesian government to strengthen exchange rate stability by diversifying international financing sources.
Finance Minister Purbaya Yudhi Sadewa, in a statement in Jakarta, on Wednesday (6 May), explained that this diversification move aims to reduce Indonesia’s dependence on the US dollar.
Issuance of debt instruments in the Chinese market would also be advantageous as they offer more competitive interest rates for the government.
Meanwhile, Dim Sum Bonds have been issued by the Indonesian government with a value of 6 billion yuan, or around Rp13.2 trillion, at an exchange rate of about Rp2,200 per yuan.
After the government announced the opening of the Dim Sum Bonds offering period on 23 October 2025, the issuance attracted interest from onshore domestic Chinese investors, with a final orderbook totaling 18 billion yuan (Rp39.6 trillion).