Indonesia Central Bank to Introduce Digital Currency

Indonesia Central Bank to Introduce Digital Currency

The BI Governor said that the bank has decided to distribute the digital rupiah through a retail scheme, meaning the digital currency will be disbursed by BI only to large banks and payments system companies.


Foreign Capital Outflow of $2.4 Billion during Ukraine War: Bank Indonesia

Arfi Bambani
Bank Indonesia Senior Deputy Governor Destry Damayanti
Bank Indonesia Senior Deputy Governor Destry Damayanti - Bank Indonesia (BI) reported that foreign capital outflows from Indonesia's financial markets amounted to Rp34 trillion or $2.4 billion during the Russo-Ukrainian war that took place in March 2022.

"Foreign capital outflows from the state securities (SBN) market are around IDR 30 trillion and the stock market IDR 4 trillion," said Indonesia Central Bank's Senior Deputy Governor Destry Damayanti at a press conference at the BI Board of Governors Meeting in Jakarta, Thursday, March 17, 2022.

Under these conditions, the domestic financial market lost USD 400 million in total foreign capital (net outflow) from January 1 to March 15, 2022.

According to Destry, foreign investors currently tend to shift their funds to safe assets such as the US dollar and gold amid global geopolitical turmoil that has succeeded in increasing the perception of investment risk, aka Credit Default Swap (CDS) for all countries, including Indonesia, which has increased by around 40 basis points.

"But we are not alone, all other countries such as Thailand, the Philippines, and Malaysia have increased, even in a higher percentage increase compared to Indonesia," she added.

The large outflow of foreign capital out of the SBN market, she continued, was also due to an increase in the yield on Indonesian SBN, which now rose to the level of 6.7 percent, driven by an increase in US bond yields to a level of 2.1 percent. However, the Indonesian SBN yields increase was not too significant because the share of domestic investors in SBN ownership was already quite strong.

"In the last two months, insurance and pension funds have entered the SBN market fairly quickly and have pushed for adjustments to SBN yields, but not too drastically," said Destry.

Even though there was an outflow of foreign capital, there was still an inflow of foreign capital due to the favorable outlook for the domestic economy, which invited investors to enter the domestic stock market.

Tag # bank indonesia # indonesia capital outflow # ukraine war # indonesia investments

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