Foreign Exchange Reserves in September Dropped US$ 1.4 Billion

foreign exchange reserves

Indonesia’s foreign exchange reserves in September reached US$ 130.8 billion. This figure fell to US $ 1.4 billion compared to the position in August 2022 which amounted to the US $ 132.2 billion. This decrease was influenced by the payment of foreign debt.

This foreign exchange report is submitted directly by Bank Indonesia (BI). In a press release, Friday (7//10/2022), BI explained that the decline in the position of foreign exchange reserves in September 2022 was influenced, among other things, by the payment of government foreign debt and the need for stabilization of the Rupiah exchange rate. This is in line with the high uncertainty in global financial markets.

The position is equivalent to financing 5.9 months of imports or 5.7 months of imports and servicing government external debt, and is above the international adequacy standard of around 3 months of imports.

Bank Indonesia views the foreign exchange reserves as capable of supporting external sector resilience and maintaining macroeconomic and financial system stability.

“Going forward, Bank Indonesia views foreign exchange reserves to remain adequate, supported by stability and maintained economic prospects, along with various policy responses to maintain macroeconomic and financial system stability to support the national economic recovery process.”

In fact, Indonesia’s foreign exchange reserves in the first 8 months of this year recorded a decline of US $ 12.7 billion or equivalent to Rp. 190.5 trillion (exchange rate of Rp. 15,000 per US dollar) because it was used to prevent the weakening of the rupiah.

Based on Bank Indonesia (BI) records, foreign exchange reserves as of August 2022 were recorded at US$132.2 billion. It fell by around US$12.7 billion when compared to its position at the end of December 2021 of US$144.9 billion.

Foreign exchange reserves in August 2022 were the lowest in 27 months. Foreign exchange reserves almost matched the position in June 2020 which had touched the level of US$131.1 billion.

The highest, foreign exchange reserves touched the level of US $ 146.9 billion in September 2021.

The ability of foreign exchange reserves to finance imports also fell to 6.1 months from last year’s position of 8 months of imports. The assumption of import financing needs is still above the world concession of at least 3 months.

However, the ability of Indonesia’s foreign exchange reserves to finance imports is below the Asian average. Based on data from Bloomberg, the foreign exchange reserves of developing countries in Asia, except China, are only able to finance about 7 months of imports on average.

This figure is the lowest since the global financial crisis in 2008. In fact, earlier this year, it were able to finance 10 months of imports. Even 16 months in August 2020.