IndoNEWSian.com – Fitch states that there is a restricted discrepancy between their deposits and foreign exchange loans. Indonesian banks needs to handle the continued depreciation of the Indonesian rupiah.
Fitch Ratings states that banks have minimal direct exposure to changes in currency values, with any effects primarily being experienced via possible difficulties faced by borrowers.
By the end of April 2025, the Indonesian rupiah had declined by approximately 4% from the beginning of the year. The rating agency noted that this depreciation, along with persistent global trade conflicts, might make it difficult for Indonesian companies to issue US dollar-denominated bonds abroad.
“This could consequently limit financial adaptability for Indonesian corporations without a history of issuing onshore rupiah bonds and with limited connections to local banks,” Fitch stated.
Several Indonesian business sectors continue to be vulnerable to fluctuations in the rupiah currency and shifts in sentiment within the offshore bond markets.
Many major developers facing significant U.S. dollar debt obligations have alleviated their liquidity issues by extending maturity dates, the report noted.
“Rupiah depreciation is unlikely to pressure Indonesian banks because there is minimal relative mismatch between their FX loans and deposits,” Fitch said, noting that FX loans were 9.2% of total assets whilst FX deposits were 11.1%.
Nevertheless, banks are more susceptible due to the effects on borrowers and the deterioration of asset quality.
“As stated by Fitch, regulators have implemented several stages of limitations on overseas and foreign-currency denominated lending since 2014. These include mandatory hedging rules designed to potentially reduce the likelihood of significant financial difficulties among borrowers,” the report noted.
