Panda Bonds Can Strengthen Rupiah, Purbaya Reveals Some Are Unhappy

Finance Minister Purbaya Yudhi Sadewa has confirmed that the issuance of Panda Bonds, or yuan-denominated debt securities, will help strengthen the rupiah exchange rate going forward. He explained that this is because the Panda Bond concept will utilise a Local Currency Transaction (LCT) scheme, meaning it does not require conversion into US dollars.

“I am also thinking that perhaps later our Panda Bond issuance will just use the LCT scheme, where they only pay in yuan, the central bank there and here arrange it, and I simply receive rupiah, so I am not affected by fluctuations or pressure from the dollar,” Purbaya said during a working meeting with Committee IV of the Regional Representative Council (DPD RI) in Jakarta on Monday (22/6/2026).

Nevertheless, Purbaya admitted that this method of reducing the government bond market’s dependence on US dollar dominance has made some parties unhappy. “Maybe there are those who don’t like it, but so be it. The other side certainly won’t like it, so be it, let it be balanced,” Purbaya asserted.

Purbaya stressed that Panda Bonds are highly strategic for the Indonesian government as they are part of efforts to diversify government debt securities, with the ultimate goal of strengthening rupiah exchange rate stability. “Don’t just be dollar-based, but also yuan-based. That country is equally large; it is the second largest in the world, and we have a bilateral swap agreement with China, a local currency transaction, according to Bank Indonesia with them. So, in that way, the pressure on the rupiah will weaken significantly,” Purbaya explained.