Purbaya: Panda Bond Reduces Dependence on US Dollar

Jakarta, VIVA – Finance Minister Purbaya Yudhi Sadewa said the issuance of a Panda Bond worth around US$1 billion is a government strategy to diversify funding sources whilst reducing dependence on the US dollar.

“This is a diversification of our funding sources. Previously, if we went global it was only dollars, so we are diversifying to Japan and Australia, and now to China,” said Purbaya at the Presidential Palace complex in Jakarta on Thursday, 23 July 2026.

He said the use of the yuan in transactions with China could also strengthen the Local Currency Transaction (LCT) scheme, thereby reducing dependence on the US dollar.

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

According to him, the strategy could also help maintain the rupiah exchange rate by reducing pressure stemming from demand for US dollars.

“The rupiah will tend to strengthen because of the pressure from the dollar. So this strategy was deliberately developed to maximise existing instruments to maintain the rupiah exchange rate,” said Purbaya.

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

Purbaya added that the funds raised from the Panda Bond issuance will be used to cover part of the deficit financing requirement and government spending.

He also said the Panda Bond issuance is part of efforts to broaden the government’s financing sources so as not to be overly dependent on the US dollar market. (Ant)