Foreign Funds Predicted to Immediately Flood Indonesia up to IDR 140 Trillion. What is the reason?

JAKARTA, KOMPAS.com – The passing of the Job Creation Law, the end of the second Large-Scale Social Restrictions (PABB) in the capital city of Jakarta, and the improving performance of the domestic financial market, capital, are projected to be able to encourage the entry of

Current dana foreign is expected to return to invade Indonesia in the next two months. This is in line with the passage of the Job Creation Law, the end of the second Large-Scale Social Restriction (PABB) in the capital city of Jakarta, and the improving performance of the domestic financial market.

Chief Economist of CIMB Niaga Bank, Adrian Panggabean, said that from 2009 to 2019 there was a flow foreign funds entering between Rp. 30 to Rp. 140 trillion per year to the market bond country with an average of around IDR 85 trillion per year.

Also read: Due to Corona, IDR 143 Trillion Foreign Funds Escape from Indonesia

“This means that if the flow of foreign funds in 2020 is recorded at Rp. 109.5 trillion, there is a possibility that there will be at least Rp. 140 trillion in foreign funds in the next two months, or the equivalent of US $ 10 billion. This estimate seems bombastic but is supported by historical data, ”said Adrian in a press release, Wednesday (28/10/2020).

He said foreign funds began to return to the domestic bond market in October after briefly disbursing them in September and August.

“The flow of foreign funds into government bonds from October to 22 reached a total of Rp 19.2 trillion, much better than the foreign outflows of Rp. 8.8 trillion in September and Rp. 3.8 trillion in August. “he said.

Meanwhile on the domestic stock market, foreign funds were still out in October, although not as big as in previous months. The outflows of foreign funds on the stock market that came out from October to 23 reached Rp. 3.9 trillion, far less than the outflows of Rp. 15.6 trillion in September and Rp. 8.5 trillion in August.

Any difference yield Indonesian government bonds and US bonds are thicker this year compared to 2021. The rupiah exchange rate against the US dollar has also been more stable since July when compared to the March to June period.

Meanwhile, the current account is estimated to have a deficit of 0.5 percent of GDP in 2020, or better than the previous estimate of a deficit of 1.6 percent of GDP.

“We estimate that the average 10-year Indonesian government bond yield will fall to around 6.25 percent in the fourth quarter of 2020 from the previous estimate of around 6.75 percent. So that the estimated 10-year bond yield in 2020 is revised down to 6.9 percent from 7.10 percent previously, “he explained.

Also read: IDR 3.40 Trillion Foreign Funds Entering the SBN Market on 22-25 June 2020

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