BI Holds Rate at 5.75%, Adds Foreign Investment Incentives: Impact on ORI030, Fixed Income Funds, and Gold

Bank Indonesia (BI) maintained the BI Rate at 5.75% during the Board of Governors Meeting on 21–22 July 2026. Amid global uncertainty due to geopolitical conflicts and high US interest rates, BI chose to maintain rupiah stability while strengthening the attractiveness of Indonesia’s financial markets through various new incentives for foreign investors. For investors, this decision is an important signal as it has the potential to maintain stability in the domestic bond market. This condition makes instruments such as ORI030, fixed income mutual funds, and gold as a diversification asset remain attractive to consider according to each risk profile.

BI maintained the BI Rate at 5.75%, the Deposit Facility at 4.75%, and the Lending Facility at 6.5%. According to BI, the decision was taken to maintain rupiah exchange rate stability, control inflation to remain within the 2.5±1% target for 2026–2027, while continuing to support national economic growth through accommodative macroprudential and payment system policies. BI also assessed that global uncertainty remains high due to conflicts in the Middle East, rising energy prices, and the potential for high interest rates in the United States, which could affect capital flows to developing countries.

In addition to holding the interest rate, BI announced several new policies to increase the attractiveness of foreign portfolio investment. These include raising the hedging swap transaction incentive to 12.5%, providing a Domestic Non-Deliverable Forward (DNDF) hedging incentive of up to 15%, strengthening the use of Local Currency Transactions (LCT), and increasing the Macroprudential Liquidity Policy (KLM) incentive to a maximum of 6% of Third-Party Funds starting September 2026. These measures are expected to help maintain rupiah stability while deepening the domestic financial market without having to raise the benchmark interest rate again.

For retail bond investors, BI’s decision to hold the interest rate provides certainty that there will be no BI Rate increase in July. Amid relatively high yields on Government Securities (SBN), ORI030 remains attractive for investors seeking fixed income with a fixed coupon until maturity. ORI030 can still be ordered through Bareksa until 30 July 2026, as long as the national quota is available. High investor interest since the start of the offering period means investors should not delay orders until close to the deadline. As of Thursday morning (23/7), the national quota for ORI030 had been increased to IDR 36 trillion, comprising IDR 30.5 trillion for ORI030T3 and IDR 5.5 trillion for ORI030T6.

The stable BI Rate is generally a sentiment that supports the bond market as it reduces uncertainty over the direction of domestic interest rates. If SBN yields move stably or decline in the future, bond prices have the potential to receive support, which could be a positive sentiment for some fixed income mutual funds. Meanwhile, the government began issuing Panda Bonds on Thursday (23/7), which are yuan-denominated bonds marketed in the domestic Chinese market, as part of a strategy to diversify financing sources. Spot gold prices fell slightly to around US$4,114.49 per troy ounce on Thursday morning, after strengthening more than 1% the previous day, influenced by a strengthening US dollar and profit-taking, although geopolitical uncertainty and global interest rate expectations still support demand for safe-haven assets. For medium to long-term investors, gold remains worth considering as a portfolio diversification instrument.