Jakarta. Finance Minister Purbaya Yudhi Sadewa says he is ready to deploy the bond stabilization fund (BSF) to support financial markets as the rupiah weakens sharply past Rp 17,500 per US dollar.

Finance Minister Purbaya Yudhi Sadewa said the government has instruments to help stabilize the bond market, including potential buybacks of government securities through the BSF, but maintained that Bank Indonesia leads efforts to manage currency stability.

“The central bank’s job is only one: maintaining exchange rate stability. We leave that to the experts there,” Purbaya said in Jakarta on Tuesday.

He explained that the BSF allows the government to step into the secondary bond market when selling pressure drives yields higher, helping stabilize prices and restore market confidence.

“We have the bond stabilization fund, but we have not yet fully activated all the instruments available to us,” he said.

In the bond market, Indonesia’s 10-year government yield is trading in the 6.7%–6.81% range as of early May 2026, easing from a one-year high of around 6.96% recorded in late April.

The yield premium over US Treasuries remains wide, with the spread on the Indonesian 10-year bond at about 231–235 basis points. Indonesian yields are hovering around 6.7%, compared with roughly 4.4% for the US 10-year Treasury.

Investor participation has also shown signs of thinning. Foreign holdings of Indonesia’s tradable government securities fell to 12.73% as of April 16, equivalent to about Rp 857.1 trillion, the lowest level in more than 19 years.

The rupiah has come under pressure, sliding to Rp 17,512 per dollar, well beyond the Rp 16,500 assumption used in the 2026 state budget, raising market attention over potential fiscal and macroeconomic risks.

Despite the currency weakness, Purbaya said the government has run internal simulations using exchange rate assumptions weaker than the official budget figure and still considers fiscal conditions manageable.

“When we calculated it, we already assumed a weaker rupiah than the state budget assumption. The budget remains relatively safe,” he said.

Indonesia’s 2026 budget assumptions include 5.4% economic growth, 2.5% inflation, a 10-year bond yield of 6.9%, and oil price assumptions at $70 per barrel, alongside specified oil and gas lifting targets.

Bank Indonesia has separately deployed multiple measures to defend the rupiah, including foreign exchange interventions, bond market purchases, liquidity management, and efforts to attract capital inflows through rupiah-denominated instruments.

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