The increase in Indonesia's foreign exchange reserves last month was mainly caused by the central government's global sukuk issuance (Islamic debt paper), oil & gas exchange receipts, and other foreign exchange receipts.

The current level of foreign reserve assets (USD $123.3 billion) is equivalent to the financing of 6.9 months of imports or 6.7 months of imports and payment of government external debt, which is well above the international standard of reserve adequacy of three months of imports.

Bank Indonesia Governor Perry Warjiyo said capital inflows into Indonesia - from the start of the year up to 6 March 2019 - reached IDR 59.9 trillion (approx. USD $4.2 billion); IDR 50.2 trillion entered in the form of bonds, while IDR 10.5 trillion entered in the form of stocks. This is in stark contrast to the IDR 9.9 trillion of capital outflows from Indonesia that occurred in the same period one year earlier. Warjiyo said it is a sign that investors have great confidence in Indonesia's economic fundamentals and have appetite for Indonesia's attractive yields.

However, pressures on the Indonesian rupiah reemerged over the past week as economic data from the USA encourage a strong US dollar (such as strong US manufacturing data), while weak data from the European Union (as well as an economic growth cut and a dovish statement from the European Central Bank) cause a weak euro (hence providing additional ammunition for the US dollar).

Other factors that put pressure on the rupiah are rising crude oil prices, uncertainty surrounding the Brexit as well as the failure of US President Donald Trump and North Korean leader Kim Jong-un to reach a deal.

Indonesian Rupiah versus US Dollar (JISDOR):

| Source: Bank Indonesia


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