Purbaya Confirms Panda Bond to Reduce US Dollar Dependence

Finance Minister Purbaya Yudhi Sadewa has stated that the issuance of Panda Bonds worth around US$1 billion, or approximately Rp17.9 trillion, is part of the government’s strategy to diversify funding sources. The move also aims to reduce Indonesia’s dependence on the US dollar. “This is a diversification of our funding sources. Previously, if it was global, it was only dollars; we diversified to Japan, Australia, and China,” Purbaya said at the Presidential Palace Complex in Jakarta on Thursday (23/7/2026). He noted that using the yuan in transactions with China could also strengthen the local currency transaction (LCT) scheme, thereby reducing future reliance on the US dollar. “And I will use LCT, Local Currency Transaction. So they pay in yuan, and I receive rupiah here between banks, between central banks,” Purbaya explained. According to him, this strategy can also help maintain the rupiah exchange rate by reducing pressure stemming from demand for US dollars. “The rupiah will tend to strengthen because of this dollar pressure. So this strategy was deliberately developed to maximise instruments to maintain the rupiah exchange rate,” Purbaya said. He explained that the initial Panda Bond issuance is capped at around US$1 billion to introduce the instrument to the market. Purbaya said the government is still assessing the book-building results before considering a subsequent issuance with a larger value. He added that the funds raised from the Panda Bond issuance will be used to cover part of the deficit financing and government expenditure, as part of efforts to broaden the government’s funding sources and avoid over-reliance on the US dollar market.