• Indonesia's FX reserves have recovered to USD 146.5 Bn in Aug-26 from USD 145.3 Bn in July. The main driver of this increase are the net foreign inflows from all 3 main instruments, as well as higher  valuation of gold reserves (USD 1.1 Bn). 
• The domestic situation remained relatively stable throughout August. In August, domestic conditions remained relatively stable, with economic policies continuing as before without any significant changes. Additionally, domestic developments have remained under control, preventing prolonged negative sentiment.
• As a result, we have seen a broad appreciation of Indonesian assets throughout the period. The stock  market notched a 4.6% MoM rise, while Rupiah strengthened by 1.7% MoM. This was followed by inflows  to both stocks (USD 0.1 Bn) and gov bonds (USD 0.9 Bn) respectively. 
• This ‘vote of confidence’ from the market has allowed BI to pare down SRBI yields (avg 7.2% in Aug 26 vs 7.66% in Jul-26) and issuance amount while still recording a USD 0.5 Bn inflow. The decision  to quickly tamper SRBI usage as soon as Rupiah showed signs of strength suggests the new BI  governor’s aversion to constrict liquidity, given the relatively high IndoNIA rates throughout August. 
• However, there remain some concerns over the medium-term trajectory. Outstanding FX swaps  (one of BI’s ‘smart’ policy tool) have declined by USD 1.6 Bn. This could be caused by either complication  on Indonesia’s Current Account (lower FX liquidity from banks) and/or reduced hedging usage by foreign  investors due to recent strengthening of the Rupiah. Additionally, the ongoing Sumatra & Kalimantan  wildfires could be exacerbated by the ‘Godzilla’ El Nino this year, disrupting Indonesia’s coal and CPO  production and exports. 
• In addition, external forces may impede further appreciation of the Rupiah. We have seen  Fed outlook turned more hawkish in the past week, sparked by Warsh’s Jackson Hole speech as well as  August’s strong NFP print. The (likely) upcoming cycle of rate hikes (from The Fed and/or BoJ) risks  straining portfolio inflows, especially at a time where increased energy prices have made some investors  pare back exposure to oil importers. With these factors in mind, we still forecast BI to raise rates one  more time this year.
  

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