Asia Macro Strategy Notes: What we heard in Jakarta...

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Asia Macro Strategy Notes: What we heard in Jakarta...

13 May 2026

Asia Macro Strategy Notes

• There is an active debate on the potential growth fall out from these

measures, with most counting on SOE spending and that policy will not take

away liquidity support.

• We didn’t detect much concern on local currency bond issuance playing

spoiler. Between a) SAL (IDR420tn, of which 200tn is locked up with the

banks); b) buffers on below-the-line investment financing (112tn vs 74tn last

year); c) the need for SRBI issuance to be backed by BI holdings of SBNs

(effectively Operation Twist); and d) space for more global bond issuance;

there is plenty to secure the supply end of the equation. The DMO will likely

continue with its barbell strategy of issuing at the very front end via bills and

longer-dated paper where insurance and pension demand has been strong in

recent months. The demand bit seems, for now, well underwritten by low

bank deposit rates (supporting AUMs in debt funds), and that duration/carry

returns have still helped keep offshore investments above water inspite of FX

losses.

Rupiah

• Currency stability remains a key policy priority. BI is counting on ‘smart

intervention’, including attracting global inflows into SRBIs via hiking their

rates. The challenge for policy here would be as/if the global rates cycle turns

higher in response to the energy-price shock, and with a very steep front end

(SRBI minus policy rate) increasingly putting pressure on the very flat (even

inverted) curve into the belly and back end.

• An important policy tool for securing a better net supply balance in FX

markets is the exporter proceed regulations. An initial draft of the regulation

is still not available; however, most onshore expect a substantial tightening