Purbaya Confirms Panda Bond to Reduce US Dollar Dependence

Finance Minister Purbaya Yudhi Sadewa said the issuance of a Panda Bond worth around US$1 billion, or approximately Rp 17.9 trillion, forms part of the government’s strategy to diversify its funding sources. The step also serves to reduce Indonesia’s dependence on the US dollar.

“This is about diversifying our funding sources. Previously, if we went global it was only in dollars, so we are diversifying to Japan, Australia and China,” Purbaya said at the Presidential Palace complex in Jakarta on Thursday (23/7/2026).

He said the use of the yuan in transactions with China could also strengthen the local currency transaction (LCT) scheme. As a result, dependence on the US dollar can be reduced going forward.

“And I will use LCT, Local Currency Transaction. So they pay in yuan and I receive rupiah here, interbank between central banks,” said Purbaya.

According to him, the strategy could also help maintain the rupiah’s exchange rate by reducing pressure stemming from the need for US dollars. “The rupiah will tend to strengthen because of the reduced pressure from the dollar. So this strategy was deliberately developed to maximise existing instruments to safeguard the rupiah’s exchange rate,” Purbaya said.

He explained that the initial Panda Bond issuance has been limited to around US$1 billion to introduce the instrument to the market. Purbaya said the government is still awaiting the book-building results of the issuance before considering a subsequent, larger offering.

Purbaya said the funds raised from the Panda Bond issuance will be used to cover part of the deficit financing requirements and government spending. He stated that the Panda Bond is part of efforts to broaden the government’s funding sources so as not to rely too heavily on the US dollar market.