Foreign Capital Flows Back

Foreign capital has begun to return to domestic financial instruments after large capital outflows from Bank Indonesia promissory notes (SBI) and state bonds as a result of global financial turmoil, a Bank Indonesia (BI) official said, according to Antara.

Central bank spokesman Budi Mulya said foreign investment in SBI dropped from Rp29.9 trillion ($3.2 billion) at the end of July to only Rp12 trillion in the third week of August as a result of the turmoil triggered by the US subprime mortgage crisis.

However, in the last week of August, foreign investors began to buy more SBIs, increasing foreign capital investment in the promissory notes to Rp17.4 trillion by the end of that month.
The amount continued to pick up to reach Rp18.4 trillion on Tuesday (4/9/07), Mulya said.

Apparently foreign investors still found investing in SBIs and state bonds more profitable, especially with the relatively stable macroeconomic conditions, he said.
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