Indonesia plans to issue euro bonds in rupiahs for the first time. It is a big step for a country that has never done it before.
Such an important event requires a large-scale preparation. The Indonesian central bank and the Ministry of Finance discuss possible issue of euro bonds in Indonesian rupiahs. The parties are trying to understand how this decision can influence the national currency. Experts note a steady increase of interest of foreign investors in Indonesia. Purchases of local bonds by foreigners reached a record level of $9 billion since the beginning of this year. This is directly related to the high assessment given by S&P Global Ratings, which upgraded Indonesia's sovereign rating to the investment grade of BBB- in May. Robert Pakpahan, the Director General of Budget Financing and Risk Management at the Republic of Indonesia, believes that inflows into government bonds can hit a record in 2017. The previous record of $10.4 billion was registered in 2014.
Given these circumstances, there is no reason to worry about the rupiah rate. Moreover, this year the Indonesian rupiah became the most stable Asian currency after the Hong Kong dollar, which rate is pegged to the US dollar. In addition, high economic growth this year should also positively affect the demand for the Indonesian bonds.
