Without Raising Interest Rates, BI Has Attracted US$7 Billion in Foreign Funds Using This Incentive

Bank Indonesia (BI) has recorded positive performance in maintaining the stability of the Rupiah exchange rate amidst high uncertainty in global financial markets. Without the need to raise the benchmark interest rate (BI Rate), the central bank has successfully captured capital inflows reaching US$7 billion.

The Governor of Bank Indonesia, Destry Damayanti, revealed that these fresh funds were successfully attracted thanks to a strategic policy innovation in the form of hedging cost incentives for foreign investors.

“What is our concern right now? We need a large supply of foreign exchange. Therefore, we are implementing our monetary policy; although we are not raising the BI Rate, we are providing a policy innovation in the form of hedging incentives,” said Destrim during a press conference with the Minister of Housing and Residential Areas (PKP), Maruarar Sirait, at the BI Building on Friday (2/10/2026).

Through this scheme, foreign investors embedding capital in Indonesia are provided with a reduction in hedging costs, ensuring that the domestic financial market remains competitive and attractive without triggering a general increase in domestic borrowing costs.

Destry detailed that since these hedging cost reduction incentives were implemented last month, the response from global market players has been very positive.

“So, since we implemented this last month, the inflow utilising our hedging cost has reached approximately US$7 billion. This means, thankfully, without raising the BI Rate, our target to maintain stability, at least for the Rupiah and our foreign exchange reserves, has been achieved,” she explained.

BI is providing hedging premium discounts of up to 30% to attract foreign capital inflows and maintain the stability of the Rupiah exchange rate without having to raise the benchmark interest rate.

Specifically, BI is providing premium reduction discounts of 15% for a 3-month tenor, 20% for a 6-month tenor, and 25% for a 12-month tenor. In the initial stage, this Buy-side Hedging Swap premium discount policy is applied to the US Dollar and the Chinese Renminbi (CNY and CNH).

Additionally, BI is also providing incentives for Domestic Non-Deliverable Forward (DNDF) hedging instruments to BI. The DNDF premium reduction is 25% for a 6-month tenor and 30% for a 12-month tenor.