30 Jun 2025 | News & Feature

TFP W27 2025: The price is right

  • Covered Interest Rate Parity suggests that SBN yields are not currently overvalued, even as they approach historic lows.
  • SBN valuation can be justified by low NDF premia, which in turn can be traced to decreased foreign ownership in bonds and successful BI intervention in the forward market.
  • Low SBN yields may not benefit loan growth, as it comes at the cost of higher absorption of domestic liquidity into SBN.