Foreign Capital Entry Flow Reaches IDR 22.84 Trillion Until Second Week May 2024

JAKARTA - Bank Indonesia (BI) reports that there is a foreign capital flow that returns or capital inflows in domestic finance until the second week of May 2024 amounting to Rp22.84 trillion.

Bank Indonesia Governor Perry Warjiyo said there was a foreign capital flow that returned to the country after the benchmark interest rate or BI-Rate rose at the Board of Governors' Meeting (RDG) last April 2024.

According to Perry, the entry of foreign capital flows also proves that the domestic and foreign investors market has welcomed positively the decision to increase the BI-Rate and increase in SRBI.

"This shows that our decision to raise the BI-Rate and the Bank Indonesia Securities (SRBI) interest rate increases market confidence so that it attracts the portfolio's capital flow," he said in a media briefing on the latest economic developments, Wednesday, May 8.

He detailed that foreign capital flows that entered SRBI until the second week of May 2024 reached Rp19.77 trillion, consisting of the first week of Rp16.19 trillion and in the second week of May 2024 Rp3.58 trillion.

Furthermore, inflows also occurred in the Government Securities (SBN) market amounting to Rp8.1 trillion, with details in the first week of May 2024 amounting to Rp5.74 trillion and Rp2.36 trillion in the second week of May 2024.

Furthermore, Perry said that there was a foreign capital outflow in stocks. If the shares in the first and second weeks still have an outflow of IDR 5.03 trillion, so that the total portfolio inflow in the first and second weeks of May 2024 is IDR 22.84 trillion," he explained.

However, Perry believes that the stock condition in the future will be better, related to the prospect of more moderate economic growth and inflation in the future.

In addition, Perry said that the portfolio's foreign capital flow will be determined by three things on the cover interest rate parity (CIRP), namely differential yield, premium risk, and economic prospects.

"By increasing the BI-Rate and SRBI, our differential yield becomes more attractive, and it encourages foreign capital flows to enter," Perry said.