23 Oct 2023 | News & Feature

On the horns of a dilemma

  • Despite the widened real rate differentials, foreign investors continue to add pressure to the domestic financial market, which may tempt BI to continue raising the policy rate in 2023.
  • Domestic investors provide a succour for the domestic bond market in 2023. However, higher rates necessary to attract domestic investors would contradict the government’s objective to limit its interest burden.
  • Despite the higher rate, domestic investors’ ability to absorb more SBN may also start to weaken given the declining liquidity within the private sector.