BANK Indonesia noted that Indonesia’s foreign exchange reserve position at the end of March 2024 remained high at US$140.4 billion, although it was down compared to the position at the end of February 2024 of US$144 billion.
The decline in foreign exchange reserves was influenced, among other things, by government foreign debt payments, anticipation of corporate foreign exchange liquidity needs, and the need to stabilize the Rupiah exchange rate in line with the continued high uncertainty in global financial markets.
“This foreign exchange reserve position is equivalent to financing 6.4 months of imports or 6.2 months of imports and payment of government foreign debt, and is still above the international adequacy standard of around 3 months of imports,” said Assistant Governor to the Head of the Bank Indonesia Communications Department, Erwin Haryono. , Friday (5/4).
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Bank Indonesia assesses that foreign exchange reserves are capable of supporting the resilience of the external sector and maintaining macroeconomic and financial system stability.
Going forward, Bank Indonesia views that foreign exchange reserves will remain adequate, supported by stability and maintained national economic prospects.
“Along with the synergy of policy mix responses taken by Bank Indonesia and the Government in maintaining macroeconomic and financial system stability to support sustainable economic growth,” said Erwin.
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This decline in foreign exchange was partly to intervene in the rupiah’s pressure on the strengthening of the value of the US dollar against the currencies of all countries, including the Indonesian rupiah.
Previously, Pilarmas Investindo Sekuritas Indonesia Associate Director of Research and Investment Maximilianus Nico Demus said that Bank Indonesia inevitably had to intervene more intensely.
Until March 25 2024, Bank Indonesia purchased Government Securities (SBN) amounting to IDR 33.5 trillion, which automatically increased Bank Indonesia’s debt securities ownership position to IDR 1,397.4 trillion.
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“The increase in SBN purchases by Bank Indonesia will indeed result in a further reduction in Indonesia’s foreign exchange reserves,” said Nico.
Apart from external influences, there are several internal influences that risk causing the rupiah to weaken, including increased imports during Ramadan and Eid and heated politics after the general election in February.
“We project that the weakening of the rupiah will continue until at least the Fed can decide to lower interest rates,” said Nico.
The weakening of the Rupiah will also haunt several companies engaged in imports, because it will push up prices.
“However, there are also those who benefit, namely Indonesian companies engaged in exports such as commodities,” said Nico.
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