Capital Markets, Economics, Foreign Exchange, Indonesia - Tuesday, May 4, 2010 21:50 - 0 Comments

Indonesia says debt will save it from capital outflows

Emerging Markets, May 2010

Indonesia’s finance ministry believes the country’s galvanized local bond market will protect it from any sudden reversal in capital inflows.

Concern has been growing about asset bubbles developing in Indonesia, with the country’s own central bank warning about the pace of inflows into Jakarta’s stock market.

But Rahmat Waluyanto, Director General for Debt Management in the Ministry of Finance, said he believes foreign capital with stay in rupiah bonds. “I don’t see there is potential danger in the near future,” he said. “We have been through many crises and there has never been a sudden reversal with investors pulling out drastically [from bond markets],” he said. Mr Waluyanto estimated that 50 to 60% of the money coming into bonds from overseas was from Indonesians keeping their money overseas, creating stability, and that the biggest institutional flows have been from long-term pension funds and insurers. Continue…

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