Indonesian government bonds attract foreign inflows for first time in over seven years

Foreign investors are piling back into Indonesian government bonds at a pace not seen since before the pandemic, marking a sharp reversal from years of steady capital flight. Roughly $9 billion in foreign inflows have flowed into rupiah-denominated government securities and Bank Indonesia Rupiah Securities (SRBI) as of June 2026, driven by a central bank that decided the best way to attract capital is the oldest trick in the book: pay people more for holding your debt. The turnaround is striking when measured against recent history. Foreign ownership of Indonesian sovereign bonds, known locally as SBN, had cratered to around 13% of outstanding issuance by late 2025. That was the lowest level in nearly two decades, a far cry from the roughly 39-40% foreign ownership share that prevailed before COVID-19 upended global capital flows. How Bank Indonesia engineered the comeback The catalyst is straightforward: Bank Indonesia hiked its benchmark interest rate by a cumulative 100 basis points across May and June 2026, pushing the policy rate to 5.75%. Higher rates mean higher yields on government paper, and higher yields tend to get the attention of global fixed-income allocators who spen...