Foreign investors have been net buyers of Indonesian bonds for four consecutive months, while the rupiah has strengthened by more than 3.5% from its record low in June. Indonesia’s equity market is also on track to record its first quarterly foreign inflow of 2026.
Bloomberg reported that several international asset managers have adjusted their positions in Indonesian assets. Invesco and PPM America have reduced their underweight positions, while Allianz Global Investors has rebuilt a tactical overweight position in short-term Indonesian government bonds and the rupiah. PT UOB Asset Management Indonesia has shifted to a neutral position on Indonesian equities.
Bank Indonesia maintained its benchmark BI-Rate at 5.75% in August 2026. The central bank stated that its policy mix remained focused on maintaining rupiah stability, supporting economic growth and attracting foreign capital inflows amid global uncertainty.
Bank Indonesia has also expanded incentives for foreign funding. From the second week of September, eligible hedging swap transactions were extended beyond portfolio investment to include foreign loans and foreign direct investment entering Indonesia since July 1, 2026. The policy is intended to reduce hedging costs and strengthen the domestic foreign exchange market.
Indonesia’s foreign exchange reserves stood at USD 146.5 billion at the end of August, up from USD 145.3 billion in July. According to Bank Indonesia, the reserves were equivalent to around 5.4 months of imports and remained above international adequacy standards.
Indonesia’s net international investment liability position declined to USD 197.4 billion in the second quarter of 2026, from USD 223.0 billion at the end of the first quarter. Bank Indonesia reported that foreign capital inflows through both direct and portfolio investment continued during the quarter.
Developments in Indonesia’s capital market have also included measures related to transparency and market structure. Earlier this year, the Financial Services Authority (OJK), Indonesia Stock Exchange (IDX) and Indonesian Central Securities Depository (KSEI) introduced reforms including public disclosure of shareholders with ownership above 1%, more detailed investor classifications and measures to identify companies with concentrated share ownership.
Authorities have also announced a roadmap to increase the minimum free-float requirement from 7.5% to 15%.
MSCI maintained Indonesia’s Emerging Market status in its June 2026 Market Classification Review. The index provider stated that it would continue to assess the implementation and effectiveness of the measures introduced by Indonesian authorities, with further assessment expected as part of its November 2026 index review.
Foreign inflows into Indonesian equities remain below the level of outflows recorded earlier in the year. Global funds recorded net purchases of around USD 296 million in Indonesian equities during the current quarter, compared with foreign equity outflows of almost USD 4 billion since the beginning of 2026.
The Jakarta Composite Index has recovered by around 25% from its early-June low but remains down almost 23% year-to-date.
Foreign investors recorded approximately USD 1.3 billion in Indonesian bond inflows in June, the largest monthly inflow in around one year, although the pace of purchases moderated in the following months.
The latest figures show a gradual return of foreign capital to parts of Indonesia’s financial market following the outflows and market volatility recorded earlier in 2026.
