Indonesia’s foreign exchange (forex) reserve slightly dropped to US$103.6 billion as of end-May, lower than the end of April level at $107.7 billion. The forex reserve position adequately cover 7.9 months of imports or 7.6 months of imports and servicing of government external debt repayments, well above the international standards of reserves adequacy at 3 months of imports. Bank Indonesia (BI) considers the position of reserve assets is still able to strengthen the resilience of the external sector and maintain the sustainability of Indonesian economic growth. The central bank’s spokesman Tirta Segara said, a decline in the forex reserve was mainly influenced by supply of forex for repayments of residents’ foreign currency obligations in line with its seasonal pattern that resulted in lower placement of banks’ foreign currency term deposit at BI. In addition, the decline in reserve assets was also affected by the use of forex for repayments of government external debt and stabilization of rupiah exchange rate in accordance with its fundamental. BI considers the decline in reserve assets in May is temporary. This is supported by the global financial markets that have regained favorable conditions as reflected in the increased availability of foreign currency in the domestic foreign exchange market. Looking ahead, Bank Indonesia will continue to maintain adequate reserves to support macroeconomic stability and financial system.
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