JAKARTA (TheInsiderStories) – Bank Indonesia (BI) noted, country’ foreign exchange reserves at the end of June 2019 were recorded at US$123.8 billion, increased 2.9 percent compared to the position at the end of May 2019 which amounted to $120.3 billion.
BI’ executive director of communication department Onny Widjanarko said that the position of foreign exchange reserves was equivalent to 7.1 months of imports or 6.8 months of imports, government foreign debt payments, and was above the international adequacy standard of around 3 months of imports.
“BI assesses that foreign exchange reserves can support the resilience of the external sector and maintain macroeconomic and financial system stability,” he explained in a written statement received on Friday (07/5).
The increase in foreign exchange reserves in June 2019 was mainly influenced by oil and gas foreign exchange and other foreign exchange receipts, as well as the withdrawal of government foreign debt. The central bank considers foreign exchange reserves to be adequate with the support of stability and a sound economic outlook.
Meanwhile, BI holds it’s 7 days reverse repo (BI-7DRR) rate at 6 percent. The decision has been taken because the board assessed that the domestic and global situation still have uncertainty.
BI’ governor Perry Warjiyo explained that the central bank sees the trade war issue between the United States (US) and China and other global issues are the matter of the policy. The tension getting high and give impacted to the global economy.
“The trade tension has made the global trade volume down and slows down the economy in several countries,” he said.
He added slowing economic growth makes many central banks make dovish policies. It will be a challenge for Indonesia to maintain foreign inflow.
In Indonesia, the board estimated a slowdown economic growth will be seen in the second quarter (2Q) of 2019 cause exports declining due to the slow down world demand.
However, the positive stimulus from Standard & Poors was a new engine to strengthen the local currency. Warjiyo revealed BI will deepen the money market to maintain the strengthening of the Rupiah.
In the finance sector, BI targeting the national loan growth around 10 to 12 percent with the realization during four months period at 11.1 percent. This growth is still below the optimum level, but he promised the central bank will strengthen the macroprudential to drive the loan growth.
One of the macroprudential policies undertaken is through a reduction in statutory reserves to a minimum of 6 percent for commercial banks. The decline is also made for Islamic banks to 4.5 percent.
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