Indonesia’s Foreign Exchange Reserves Decreased to Rp. 33 Trillion in Just One Month

foreign exchange reserves

Bank Indonesia BI reported a decline in Indonesia’s foreign exchange reserves in March 2022. There was a decrease of US$2.3 billion or Rp. 33.12 trillion (exchange rate of Rp. 14,400 per US dollar) when compared to the position at the end of February 2022 which reached US$141.4 billion.

Despite the decline, Bank Indonesia (BI) ensured that Indonesia’s foreign exchange reserves remained high, at US$139.1 billion at the end of March 2022.

Head of the BI Communications Department Erwin Haryono said that the decline in the position of foreign exchange reserves was influenced by the need for payment of the government’s foreign debt.

“BI assesses that the foreign exchange reserves can support the resilience of the external sector and maintain macroeconomic and financial system stability,” he said in a press release, Thursday (7/4/2022).

He said the foreign exchange reserve position was equivalent to financing 7.2 months of imports or 7.0 months of imports and servicing the government’s foreign debt.

The position of foreign exchange reserves in March 2022 was also above the international adequacy standard of about 3 months of imports.

Erwin added, “Going forward, BI views foreign exchange reserves as adequate, supported by stable economic stability and prospects, along with various policy responses to promote economic recovery.”

On the other hand, Bank Danamon Macroeconomic Analyst Irman Faiz estimates that foreign exchange reserves by the end of 2022 will fall to the level of US$ 140 billion although it is still in the high category. This is because in the second semester of 2022.

In addition, according to him, import acceleration will also increase pressure due to the normalization of the Fed, which will also encourage stabilization action from the central bank.

“For the rupiah exchange rate at the end of the year, we estimate it will move towards Rp. 14,500-Rp. 14,600,” he added.