JAKARTA (TheInsiderStories) – Bank Indonesia (BI) noted foreign exchange (forex) reserves at the end of January 2019 amounted to US$120.1 billion, a decreased 0.49 percent from $120.7 billion at the end of December 2018.
The position of foreign exchange reserves is equivalent to financing of 6.7 months of imports or 6.5 months of imports and payment of government foreign debt, and is above the international adequacy standard of around 3 months of imports. Bank Indonesia considers that foreign exchange reserves are able to support the resilience of the external sector and maintain macroeconomic and financial system stability.
The central bank said, decline in forex reserves mainly affected by the payment of government foreign debt. Going forward, BI considers forex reserves to be adequate, supported by confidence in the stability and prospects of a good domestic economy, and export performance that remains positive.
Previously, the central bank mentioned that the nation holds $372.9 billion foreign debt in November 2018, hiked by seven percent compared to the same period in the prior year.
The spike was contributed from both government, BI, private companies, including state-owned enterprises. Indonesian government and central bank owned $183.5 billion debt.
Government foreign debt growth was on account of foreign capital inflows to government securities market. Meanwhile, private companies including state-owned enterprises have $189.3 billion debt.
The hike mainly driven by foreign buying of corporate bonds. It incurred in financial and insurance services, manufacture, gas, electricity, and water supply sector, as well as mining sectors.
The increase itself in November only is quite big with $12.3 billion additional debt from October.
According to BI, the increasing debt was caused by withdrawals of the external debt and Rupiah against US Dollar strengthening, that resulted in bigger local denomination debt held by foreign investors in term of US Dollar.
Amid the constantly increasing foreign debt, the central bank still considered Indonesia’s foreign debt structure as healthy. Its ratio to Gross Domestic Product (GDP) is at 34 percent, better than peers’ average. Moreover, 84 percent of the total foreign debts have long-term maturity.
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