Foreign Capital Returns After BI Rate Hike

Bank Indonesia (BI) stated that foreign investors responded positively to the increase in the benchmark interest rate to 5.50 percent and the strengthening of domestic investment instrument yields. Head of the BI Communication Department Ramdan Denny Prakoso noted an increase in foreign capital inflows into Bank Indonesia Rupiah Securities (SRBI) and Government Bonds (SBN). “This is reflected in the increase in foreign capital inflows to SRBI instruments following the SRBI auction on 10 June 2026,” Denny said in a written statement on Friday, 12 June 2026. He also stated that foreign capital flows have begun returning to the SBN market, particularly in short and medium tenors.

In line with these developments, Denny said the rupiah exchange rate against the US dollar continued to strengthen and returned to below the level of Rp 18,000 per US dollar. He said BI will continue to monitor global and domestic financial market developments and maintain the attractiveness of domestic financial instruments to support foreign capital inflows. The rupiah exchange rate had strengthened on Tuesday, 9 June and Wednesday, 10 June 2026. On Wednesday, 10 June 2026, the rupiah closed 114 points stronger at Rp 17,944 per US dollar. However, the rupiah weakened again to Rp 17,988 per US dollar on Thursday, 11 June 2026.

Professor of Economics and Business at Airlangga University Rahma Gafmi said BI’s move to raise interest rates outside the monthly Board of Governors Meeting could be an effective shock therapy to calm the foreign exchange market. “However, if yesterday’s rupiah depreciation was mainly triggered by external fundamental factors, such as the global strength of the US dollar or geopolitical escalation, this 25 basis point hike risks being only a temporary buffer at the cost of sacrificing domestic economic growth,” Rahma told Tempo.