Tim Riset Ekonomi dan Industri BCA

 

Indonesia's FX reserves marginally recovered to USD 145.6 Bn in June 2026, from a multi[1]month low of USD 144.9 Bn the previous month. The recovery was primarily driven by debt-based inflows (Chart 2), specifically higher foreign investment in SRBI and SBN, coupled with improving fundamentals like oil prices returning to pre-war levels. Despite this, lower gold prices led to a USD 1.4 billion decline in the gold component of FX reserves.

  

FX reserves were pressured over the past two months by a lack of significant trade surpluses, primarily due to elevated oil prices and production cuts impacting exports. This is an unfortunate opportunity loss, given still-high terms-of-trade. Looking ahead, export performance remains uncertain, dependent on government commodity policies. While oil imports may normalize, overall imports will see upward pressure from sustained government spending.

  

While equity markets continued to record net outflows, bond market conditions reversed following the second BI rate hike last month, with 10-year SBN yields consistently holding above 7%. The largest inflows continued to come from SRBI, driven by higher net issuance and yields reaching up to 7.7%.The next two key determinants in this category are: the outcome of the USD 1 Bn Panda bond issuance by the end of this July, and the evolving domestic perception from rating agencies such as S&P.

  

But the other main question is: what is the cost associated with this increase in FX reserves? Firstly, SRBI maturities alone amount to IDR 114 Tn (~USD 6.3 Bn) this July, with another IDR 300 Tn (~USD 16.7 Bn) due in Q4. Secondly, the current attractiveness of SRBI is underpinned by a 10% hedging swap rate discount, which led to a sharp increase in BI’s FX swap position (Chart 3). This implies that in addition to BI bearing high interest costs for SRBI, BI also forfeits its typical revenue from swap premiums. Thirdly, an increase in SBN yields could push the government’s interest payment burden above 20% (of revenue).

  

The idea is that risks stemming from an all-out policy to attract hot money would gradually resolve if global liquidity trends structurally improve, or if global monetary policy suddenly reverses due to factors like unemployment. However, for the time being, BI will likely need to further hike its policy rate this year to cope with ongoing and anticipated increases in the interest rate complex.

  

Versi lengkap report ini (dan report sebelumnya) dapat diakses lewat link berikut: https://s.id/BCA_REI