NEW DELHI, November 7: Indonesia’s Financial System Stability Committee (KSSK) says the financial system stayed stable in the July–September quarter, but that pressure “increased again” in October as the Middle East conflict pushed up energy prices, global interest rates stayed high and money flowed out of Indonesian shares. On Friday, Bank Indonesia said foreign exchange reserves were steady at $146.8 billion at the end of October.
Key highlights
- Pressure points: the committee named higher global energy prices, tight global monetary policy, tighter domestic liquidity, an MSCI announcement on stock market conditions, and capital outflows from shares that weighed on the rupiah.
- Rupiah: Rp18,145 per US dollar on November 2, 0.11% weaker than at the end of October.
- Reserves: $146.8 billion at end-October, up from $146.3 billion, enough for 5.3 months of imports.
- Bank liquidity: the reserve requirement for conventional banks is being cut from 9% to 8% from November 1 and to 7% from December 1.
- Inflation: 3.23% in October, down from 3.28%, within the 2.5% ±1% target.
- Growth: the committee expects the economy to grow by more than 5.4% in 2026.
| Indicator | Latest figure |
|---|---|
| Foreign exchange reserves (end-October) | $146.8 bn (end-September: $146.3 bn) |
| Rupiah (November 2) | Rp18,145 per US$ |
| BI-Rate / Lending Facility | 5.75% / 6.50% (held August–October) |
| Deposit Facility | 5.00% (raised in October) |
| Reserve requirement, conventional banks | 9% → 8% (Nov 1) → 7% (Dec 1) |
| Reserve requirement, Islamic banks and units | 7.5% → 6.5% (Nov 1) → 5.5% (Dec 1) |
| CPI inflation, October | 3.23% (core 2.65%, volatile food 5.81%) |
| Trade surplus, January–September | $10.61 bn |
| Foreign portfolio flows, January–October 23 | Net inflow of $13.23 bn |
What the committee said
The KSSK brings together the Finance Minister, the Bank Indonesia Governor and the heads of the Financial Services Authority (OJK) and the Deposit Insurance Corporation (LPS). After its quarterly meeting on October 28, it said the economy was resilient, with solid growth and steady lending, but that conditions had become harder in October. It noted that the US Federal Reserve, the European Central Bank and the Bank of Japan had each raised rates by 25 basis points in September and were expected to keep them high for longer, which limits investor appetite for emerging-market assets and keeps the US dollar strong.
Foreign portfolio flows showed a small net outflow of $0.08 billion in the third quarter, mainly from shares, before a net inflow of $0.04 billion in October up to the 23rd, driven by government bonds (SBN) and Bank Indonesia’s rupiah securities (SRBI). The rupiah had strengthened until mid-September before weakening again.
What Bank Indonesia is doing
Bank Indonesia has kept its benchmark BI-Rate at 5.75% since August but raised its Deposit Facility rate to 5.00% in October to make rupiah assets more attractive, as covered in our report on that decision. At the same time it is releasing liquidity to banks by cutting the share of deposits they must hold at the central bank, in two steps on November 1 and December 1. The central bank said October’s reserve level was helped by government foreign loan drawdowns and tax and services receipts, offset by government debt repayments and its own rupiah stabilisation.
The budget
Up to the end of September, state revenue reached Rp2,341.5 trillion, up 25.5% year on year, with tax receipts up 21.8%. Spending reached Rp2,660.5 trillion, up 19.0%. Fuel and food subsidies totalled Rp222.5 trillion and compensation payments Rp154.5 trillion, and the Free Nutritious Meals programme had spent Rp153.2 trillion for 57 million recipients.
Our calculation
- Spending exceeded revenue by about Rp319 trillion in the first nine months.
- Reserves rose by $0.5 billion, or about 0.3%, in October.
- The two-step cut lowers conventional banks’ reserve requirement by 2 percentage points in total.
What it means for India and Asia
Indonesia, South-East Asia’s largest economy, is growing well, as its 5.47% third-quarter growth showed, but its currency is under pressure from the same forces hitting other emerging markets: costly oil and high global interest rates. Its policy mix, holding the main rate while easing bank reserve rules, is a balancing act between protecting the rupiah and keeping credit flowing. For India, Indonesia is a major supplier of coal and palm oil and a growing market for Indian goods, so its financial stability matters for that trade.
What to watch
- Bank Indonesia’s next policy meeting and whether it moves the BI-Rate.
- The second reserve requirement cut on December 1.
- Foreign flows into Indonesian shares after the MSCI announcement the committee mentioned.
Central Jakarta around Merdeka Square, seen from Istiqlal Mosque. Image: Gunawan Kartapranata, CC BY-SA 3.0, via Wikimedia Commons. Photo source · Licence
Sources
- Bank Indonesia: KSSK press release No. 04/KSSK/Pers/2026, November 3, 2026 (in Indonesian)
- Bank Indonesia: Cadangan Devisa Oktober 2026 Tetap Terjaga (No. 28/242/DKom), November 6, 2026 (in Indonesian)
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