Throughout August 2021, the Composite Bond Index rose 1.34% to 327.93.

Optimism among bond market players regarding 2022 economic growth, the extension of the Community Activity Restriction (PPKM) in Java and Bali, and the weakening US dollar have fueled demand for bonds. As a result, domestic bond prices moved positively throughout August 2021. Conversely, yields have been eroded.

According to the Indonesian Securities Pricing Agency (PHEI), the Indonesia Composite Bond Index (ICBI) closed up 0.7501 points (0.23%) to 327.9267 on Tuesday, August 31, 2021, compared to the previous day's closing.

Cumulatively throughout August 2021, the ICBI rose 4.32 points (1.34%). Year-to-date (YTD), the ICBI also rose 13.62 points or 4.33%, and year-on-year (YOY), it increased by 32.09 points or 10.85% from its position at the end of August 2020.

With the strengthening rupiah, investment in the Indonesian bond market has become more attractive. In addition to yield, foreign investors also benefit from the exchange rate difference due to the rupiah's appreciation against the US dollar.

Based on Asiabondsonline data, the yield on Indonesian government bonds with a 10-year tenor was 6.12%/year at the close of August 30, 2021. This yield is higher than that of government bonds in other countries such as Vietnam (4.1%), Malaysia (3.21%), Vietnam (2.1%), and Thailand (1.59%).

Indonesia's bond yield is also more attractive than that of Chinese government bonds (2.85%), Hong Kong government bonds (1.18%), South Korean government bonds (1.91%), Singapore government bonds (1.43%), and US government bonds (1.31%).

The rupiah exchange rate strengthened by 2.23% against the US dollar (YTD) until August 30, 2021. Similarly, the Malaysian ringgit (3.25%), the Philippine peso (3.63%), and the Thai baht (7.79%) also strengthened. Meanwhile, the Vietnamese dong weakened (1.4%) against the US dollar.