Jakarta. Indonesia’s foreign exchange reserves rose to $146 billion at the end of August, supported by strong foreign inflows into government bonds and Bank Indonesia’s rupiah securities, Governor Destry Damayanti said Thursday.

The figure edged up from $145.3 billion recorded in July.

Foreign exchange reserves serve as an important buffer for Bank Indonesia’s monetary operations, including efforts to stabilize the rupiah.

Destry said foreign funds continued to flow into Indonesia’s financial markets following adjustments in the yields of government securities, known locally as SBN, and Bank Indonesia Rupiah Securities (SRBI).

“We are seeing quite substantial inflows, particularly into two instruments, namely SBN and SRBI. The total holdings in these two instruments are in the range of $10 billion to $11 billion,” Destry said at the 2026 Gathering of 100 Indonesian Economists at Hotel Indonesia Kempinski in Jakarta.

However, foreign capital flows into the stock market remain a concern, according to Destry.

To diversify and strengthen foreign exchange flows, the government and Bank Indonesia will continue promoting Local Currency Transactions (LCT), which allow cross-border trade and investment settlements to use local currencies instead of the US dollar.

“We will certainly continue to promote LCT because the trend has continued to rise, particularly involving China and Japan,” Destry said.

Bank Indonesia is also expanding incentives for foreign funding to strengthen the effectiveness of rupiah stabilization and maintain adequate rupiah liquidity.

The central bank will broaden the underlying transactions eligible for a 12.5% premium reduction on hedging swaps with Bank Indonesia. Previously, the incentive applied only to portfolio inflows. It will now also cover foreign loans received by banks and foreign direct investment.

“We want to attract foreign investors, and we are providing incentives by reducing their hedging costs,” Destry said.

The hedging swap transactions can have a maximum tenor of 12 months and contracts can run for up to three years, with rollovers allowed based on the remaining tenor of the underlying hedging contract.

The expanded incentive will take effect in the second week of September and apply to eligible foreign loans and foreign direct investment entering Indonesia from July 1, 2026.

“What we are doing now is lowering hedging costs without cutting the BI Rate or raising SRBI yields. Instead, we are providing incentives through lower hedging costs,” Destry said.

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