The central bank of Indonesia (Bank Indonesia) announced that the nation's official foreign exchange reserves stood at USD $122.9 billion at the end of May 2018, down from USD $124.9 billion in the preceding month. The decline, which had been expected, was mainly due to the use of foreign exchange to repay public foreign debt and to stabilize the Indonesian rupiah amid persistently high uncertainty in global financial markets.
The decline in May 2018 means that Indonesia's foreign exchange reserves have now declined for the fourth-consecutive month (after having touched an all-time record high at USD $131.9 billion in January 2018). Pressures on emerging market assets, including the rupiah, are primarily caused by expectations of further monetary tightening in the USA, higher US treasury yields, and concerns about a global trade war. These matters give rise to broad-based US dollar strength. What makes matters worse for the rupiah is that the Indonesian currency is among the more fragile currencies and therefore rapidly dumped in times of global turmoil or uncertainty.
In a statement Bank Indonesia noted that the current level of foreign exchange reserves is equivalent to the financing of 7.4 months of imports or 7.2 months of imports and servicing of government external debt. This remains well above the international standard of reserve adequacy at three months of imports. Therefore, Bank Indonesia regards the position is able to support external sector resilience and to maintain macroeconomic and financial system sustainability.
Foreign Exchange Reserves Indonesia - Past 12 Months:
Foreign Exchange Reserves Indonesia - Past Decade:
¹ in billion USD dollar at the year-end
Source: Bank Indonesia