[JAKARTA] Indonesia’s sovereign bond market is on course for its first monthly foreign outflows of the year as economic instability and a falling rupiah erode investor confidence.
Foreign investors have net sold US$221 million worth of government debt this month, putting the market on track for its first outflow since November, according to Finance Ministry data compiled by Bloomberg as at Apr 22. The yield on the benchmark 10-year bond has fallen more than nine basis points over the same period.
Uncertainty is weighing on the nation’s assets. Bank Indonesia has warned investors’ risk aversion may continue amid a rapidly changing global tariff situation, pledging further intervention to safeguard the rupiah.
At the same time, President Prabowo Subianto’s attempts to manage state finances while funding expensive high-priority projects fuel questions about economic growth.
“The country’s ability to maintain economic stability and manage external risks will be critical in attracting renewed investor interest,” said Shier Lee Lim, lead FX and macro strategist at Convera Singapore.
Foreign funds have pulled roughly US$3 billion from Indonesia’s stock market in 2025, while the rupiah, which hit a record low earlier this month, is down more than 4 per cent this year – making it the only loser among Asia’s major currencies.
A NEWSLETTER FOR YOU
Friday, 8.30 am
Asean Business
Business insights centering on South-east Asia’s fast-growing economies.
The currency’s slump stayed Bank Indonesia’s hand for a third straight month last week as it kept interest rates unchanged, underscoring the delicate balancing act for the board as the tariff turmoil both weakens the rupiah and dims its growth prospects.
“The external sentiment added with domestic risk, which is the rupiah factor, becomes a double whammy for the investors,” said Adra Wijasena, fixed income analyst at Shinhan Sekuritas Indonesia.
Elsewhere in the region, Malaysia saw US$690 million of overseas investment into conventional government bonds in the first quarter, according to central bank data.
Meanwhile, foreigners have poured over US$2 billion into baht bonds this year following a recent buying spree, partly on dovish wagers on the Bank of Thailand. BLOOMBERG
