Foreign Capital Flow Potentially Enters Emerging Markets Including RI After Easing Interest Rates

JAKARTA - Bank Indonesia (BI) is optimistic that foreign capital flows have the potential to enter Indonesia after the central banks of developed countries relax their respective benchmark interest rate policies.

BI Deputy Governor Juda Agung said the trend of high interest rates had ended after various developed countries relaxed their monetary policy.

Therefore, it has the potential to make foreign capital flows into various developing countries or emerging markets, including Indonesia.

"In China, there are also various stimulus policies, so that the convergence of policies for these developed and large countries will then reduce or ease uncertainty in the global financial market and increase the flow of entry to emerging markets including Indonesia," he said in the launch of the financial stability study book No. 43 and a green calculator, Wednesday, October 2.

Juda explained that the end of financial market uncertainty will ease, after various indicators of economic pressure, such as high inflation in developed countries, have begun to end.

"Uncertainty is currently easing, in line with the continued slowdown in inflation in various countries. In the US inflation is expected to approach inflation's target of 2 percent amid rising unemployment rates," he said.

Currently, said Juda, the stability of the financial system in Indonesia is getting better, as reflected in the strengthening of the rupiah exchange rate.

"Rupiah is experiencing strengthening which then opens up space for lower interest rates. In the banking sector, high capital resilience, adequate liquidity, and controlled credit risk also continue to encourage growth in banking intermediation performance, which until last August grew at 11.4 percent (yoy)," he said.