The increase of UST Yield impacts the financial sector of emerging market countries, especially Indonesia. This caused global market participants to invest in UST, moving their capital from developing countries. As a note, Bank Indonesia Board of Governors Meeting on May 24-25 2021 decided to maintain the BI 7-DRRR at 3.50%; BI has cut the benchmark rate by 150bps since the start of the pandemic at the end of last year. Meanwhile, deposit facility and lending facility interest rates are still at 2.75% and 4.25%. BI’s commitment to keep BI 7-DRRR low made IDIC cut the deposit insurance rate.
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