28-8-2023 (JAKARTA) Bank Indonesia is set to introduce new certificates next month that are expected to offer attractive yields for foreign investors. These certificates, called Bank Indonesia Rupiah Securities (SRBI), will be auctioned every Wednesday and Friday with durations of 6, 9, and 12 months. The yields are expected to be similar to rates offered for reverse repurchase (RR) of government bonds.
The central bank aims to attract capital inflows, mop up excess rupiah liquidity in the domestic market, and stabilize the rupiah currency. Indonesia has recently faced deficits in its current account and balance of payments.
The SRBI certificates will replace Bank Indonesia’s “Operation Twist” strategy, where short-term government bonds were sold, and long-term bonds were bought when yields increased. This new instrument could help manage the Indonesian rupiah in a volatile market.
The success of the SRBI will depend on the yields offered, but it is seen as a positive step to maintain liquidity and economic growth. The auctions could potentially be expanded to include shorter tenures and increased frequency.
