Indonesia’s hedging incentives attract nearly US$12 billion
Premium discounts for six- and 12-month DNDF hedges have risen to 40 per cent and 45 per cent, respectively.
Bank Indonesia’s hedging incentives brought in almost US$12 billion between their introduction in July and October 2026, Governor Destry Damayanti said. She put the amount channelled through DNDF transactions at about US$2 billion, with swaps accounting for almost US$10 billion.
Speaking at KADIN’s national leadership meeting in Jakarta on 29 October 2026, Destry said reducing hedging costs was a way to make investment portfolios more attractive without offering higher yields. She described the targeted measure as an alternative to raising interest rates amid global uncertainty.
Destry explained that investors using swaps bring dollars and exchange them for rupiah to invest, while Bank Indonesia holds the dollars. She said foreign investors need protection through either swaps or DNDF transactions.
Under its latest measures, the central bank increased premium discounts on DNDF hedging transactions linked to overseas funding. Eligible underlying transactions include portfolio inflows, foreign borrowing by banks and foreign direct investment. The discount for a six-month tenor rose from 25 per cent to 40 per cent, while the 12-month discount increased from 30 per cent to 45 per cent.
Bank Indonesia also retained incentives for conventional buy-swap hedging transactions with the central bank tied to overseas funding. Premium discounts are set at 15 per cent for three months, 20 per cent for six months and 25 per cent for 12 months.
