The Indonesian rupiah has been under heavy pressures due to expectations of further monetary tightening in the USA, rising US treasury yields, concerns about the breakout of a global trade war, rising crude oil prices, as well as high local US dollar demand in the April-May dividend payout season. Moreover, on Tuesday (08/05) the rupiah passed beyond the psychological level of IDR 14,000 per US dollar.

Indonesian Rupiah versus US Dollar (JISDOR):

| Source: Bank Indonesia

At the moment Indonesia is the most-affected Asian emerging economy with the selloff impacting heavily on the benchmark Jakarta Composite Index, rupiah and bonds. In fact, on Tuesday, Indonesia's Finance Ministry refrained from selling bonds at a planned auction as investors asked for yields that were too high.

Several weeks ago Bank Indonesia Governor Agus Martowardojo confirmed that the central bank had been spending "a sizeable amount" of foreign currency to defend the rupiah in the currency and bond markets. In a statement released on the Bank Indonesia website on Tuesday (08/05) the central bank said the fall in reserve assets is mainly due to the use of foreign exchange for the repayment of government external debt and to stabilize the rupiah in the midst of high uncertainty in global financial markets.

From a record high of USD $131.9 billion in January 2018, Indonesia's foreign exchange assets have now declined USD $7 billion to USD $124.9 billion in April. However, the current amount is still sufficient to finance 7.7 months of imports or 7.4 months of imports and servicing of government external debt, well above the international standard of reserve adequacy of three months of imports.

Foreign Exchange Reserves of Indonesia:

 2010  2011  2012  2013  2014  2015  2016  2017
Foreign Exchange
 66.1  96.2 110.1 112.8  99.4 111.9 105.9 111.5 130.2

¹ in billion USD dollar at the year-end
Source: Bank Indonesia