Indonesia’s Financial System Remains Resilient in Q2 2025, Says KSSK
Main Takeaways
|
JAKARTA, investortrust.id – Indonesia’s financial system has remained stable throughout the second quarter of 2025, according to the Financial System Stability Committee (KSSK), despite escalating global uncertainties stemming from rising trade barriers and geopolitical tensions.
Finance Minister Sri Mulyani Indrawati, who chairs the committee, said that coordinated policy efforts between the Ministry of Finance, Bank Indonesia (BI), the Financial Services Authority (OJK), and the Indonesia Deposit Insurance Corporation (LPS) were key to maintaining systemic resilience.
Speaking at the quarterly KSSK press conference on Monday, July 28, Sri Mulyani stated, “Following the third KSSK meeting on Friday, July 25, we concluded that financial system stability in the second quarter has been preserved despite ongoing global uncertainties.”
The KSSK includes the Minister of Finance, Governor of Bank Indonesia Perry Warjiyo, Chairman of OJK Mahendra Siregar, and Chairman of LPS Purbaya Yudhi Sadewa.
Global Shocks Weigh on Outlook
The committee noted that international developments posed ongoing challenges. These included the imposition of reciprocal tariffs by the United States and rising geopolitical and military tensions in the Middle East.
“These developments have heightened uncertainty and slowed global growth,” said Sri Mulyani, citing contractions across major economies such as the United States, the European Union, and Japan.
China's annual economic growth also slowed to 5.2% in the second quarter from 5.4% previously, largely due to weaker exports. Meanwhile, India continued to post strong investment-led growth. Other emerging economies experienced declining exports and dampened global trade.
Bank Indonesia’s Intervention Supports the Rupiah
The rupiah exchange rate showed signs of recovery, thanks in large part to BI’s continuous interventions in offshore markets, including the Non-Deliverable Forward (NDF) market.
“The rupiah had previously faced pressure due to global uncertainty, but thanks to BI’s consistent stabilization policy, it strengthened to Rp 16,235 per US dollar by the end of June, from Rp 16,865 in April,” Sri Mulyani said.
The rupiah’s recovery was further supported by improved capital inflows and foreign exchange conversion from natural resource export proceeds, following the implementation of the Devisa Hasil Ekspor (DHE SDA) regulation.
By late July, the rupiah remained relatively stable at around Rp 16,315 per dollar.
Sovereign Bond Market Rebounds
Indonesia’s sovereign bond (SUN) market also strengthened in the second quarter. The benchmark 10-year SUN yield declined 41 basis points (bps) year-to-date (ytd) to 6.62% by the end of June, with net foreign inflows reaching Rp 42.02 trillion.
Foreign ownership of SUN rose slightly to 14.56% as of June 30. The government attributed the improvement to a combination of factors: persistently high US inflation, Middle East conflict escalation, and BI’s decision to cut the benchmark BI Rate by 25 bps in May.
Yields on 10-year government securities (SBN) dropped further to 6.51% by July 25—down 51 bps ytd—as BI reduced its policy rate to 5.25%.
Foreign investors maintained strong participation, recording a total net buy of Rp 58.29 trillion ytd by late July, lifting foreign ownership in SBN to 14.64%.
Stay ahead of financial system trends and market shifts with real-time insights from InvestingPro — exclusive discount now available for Investortrust readers. Click here to access the offer.