Bank Indonesia Successfully Conducts First BI-FRN Auction

Historic Auction Results

Bank Indonesia (BI) has successfully conducted its inaugural auction of the Bank Indonesia Floating Rate Note (BI-FRN), absorbing Rp767 billion out of total bids amounting to Rp2.82 trillion. The auction, held on November 17, 2025, featured the BI-FRN IDFN161126364S series with a 364-day tenor. The weighted average margin for winning bids was 0.77757%, significantly lower than the 1.08646% weighted average margin of all submitted bids ¹

Market Reaction and Implications

The high demand for BI-FRN, with bids reaching Rp2.82 trillion, reflects strong interest from banks in this new instrument. However, BI's decision to absorb only about 27% of the total bids demonstrates the central bank's cautious approach to liquidity management. According to Josua Pardede, Chief Economist at PT Bank Permata Tbk., this limited absorption indicates that BI is not aiming to aggressively absorb liquidity but rather to test the auction mechanism and establish a fair margin for the one-year tenor based on INDONIA ¹

Developing the Money Market

The introduction of BI-FRN is a strategic move by BI to deepen Indonesia's money market and promote the development of overnight index swap (OIS) transactions. BI-FRN is designed as a short-term, floating-rate instrument that will serve as an underlying asset for OIS contracts. This development is part of BI's broader efforts to reform the domestic interest rate benchmark towards a transaction-based system, as outlined in the Blueprint Pengembangan Pasar Uang (BPPU) 2030 ²

Future Outlook

The successful launch of BI-FRN is expected to have a positive impact on the money market by providing a new liquid instrument and enhancing price transparency. As the market for BI-FRN and related derivatives like OIS grows, it will contribute to more effective monetary policy transmission and better risk management for market participants. BI plans to continue developing this market through various measures, including expanding the issuance of BI-FRN and enhancing matchmaking mechanisms between market players ²