The foreign exchange reserves of Indonesia fell to USD $126.0 billion at the end of March 2018, down from a level of USD $128.06 billion one month earlier. The decrease in reserve assets was particularly attributed to the use of foreign exchange for public foreign debt repayments and rupiah stabilization efforts amid pressures stemming from rising global uncertainty in the financial markets. Uncertainties originate from the latest Fed Funds Rate hike as well as the looming trade war between the USA and China (but would be felt across the globe).
According to Indonesia's central bank (Bank Indonesia), the current reserve asset position is equivalent to the financing of 7.9 months of imports or 7.7 months of imports and servicing of government external debt, well above the international standard of reserve adequacy of three months of imports. Hence, Bank Indonesia stated that it considers the current level of reserve assets safe. Moreover, it expects the nation's reserve assets to remain at an adequate level in the foreseeable future as the outlook for the domestic economy as well as export performance is upbeat.
Bank Indonesia Deputy Governor Mirza Adityaswara confirmed that the central bank has been active in the market in the February-March 2018 period to defend the rupiah amid pressures (mostly stemming from looming tightening US monetary policy and US protectionist measures as well as protectionist speech and possible retaliation measures conducted by other nations). However, considering the Federal Reserve raised its benchmark interest rate in March, Adityaswara believes it will not be necessary for Bank Indonesia to intervene in markets in April.
Foreign Exchange Reserves Indonesia:
¹ in billion USD dollar at the year-end
Source: Bank Indonesia