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Investing.com - Bank of Indonesia (BI) is on track to exceed its annual bond purchase target, having already bought IDR 106 trillion year-to-date, according to a recent Bank of America (BofA) report.
The central bank’s purchases have absorbed nearly 40% of net bond issuance so far this year, providing significant support to the Indonesian bond market despite recent rallies.
BI’s current pace of bond buying is expected to surpass its earlier guidance of approximately IDR 150 trillion for the year, even without accounting for burden sharing bonds rollover.
BofA analysts note that front-end bonds are well-supported through multiple factors, including lower net issuance to market, expectations of further monetary easing as the Indonesian rupiah (IDR) appreciates against the US dollar, and ongoing liquidity injections.
These liquidity measures include a reduction in outstanding SRBI (Sertifikat Bank Indonesia) to around IDR 818 trillion, down from a peak of IDR 969 trillion, while the yield curve appears relatively flat compared to historical patterns given the current monetary easing cycle and longer-term fiscal premium.
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