Purbaya: Panda Bond Reduces Dependence on US Dollar

Finance Minister Purbaya Yudhi Sadewa stated that the issuance of Panda Bonds worth approximately US$1 billion is a government strategy to diversify funding sources and reduce dependence on the US dollar. “This diversifies our funding sources. Previously, we only used the dollar globally, now we are diversifying to Japan, Australia, and China,” he said at the Presidential Palace complex in Jakarta on Thursday, 23 July 2026. He said that using the Yuan in transactions with China could also strengthen the Local Currency Transaction (LCT) scheme, thereby reducing reliance on the US dollar. “And I will use the LCT, Local Currency Transaction. So they pay in Yuan, and I receive Rupiah here between central banks,” he stated. According to him, this strategy can also help maintain the rupiah exchange rate by reducing pressure stemming from the need 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. Purbaya mentioned that the initial phase of the Panda Bond issuance is capped at US$1 billion, aimed at introducing the instrument to the market. He said the government is still observing the results of the book building before considering a subsequent issuance with a larger value. Purbaya added that the funds raised from the Panda Bond issuance will be used to cover part of the deficit financing and government spending. He also said that the Panda Bond issuance is part of efforts to expand the government’s funding sources, so as not to be overly dependent on the US dollar market.