Indonesia' foreign exchange (forex) reserves amounted to US$126.7 billion at the end of October 2019 - Photo: Privacy.

JAKARTA (TheInsiderStories) – Indonesia’ foreign exchange (forex) reserves amounted to US$126.7 billion at the end of October 2019, said the central bank on Thursday (11/7). The reserves rose 1.93 percent from the position at the end of September 2019 of $124.3 billion.

The rising of forex reserves in October was influenced by the issuance of global government bonds, oil and gas foreign exchange receipts, and other foreign exchange receipts, Bank Indonesia (BI) reported.

The reserves are equivalent to financing 7.4 months of imports or 7.1 months of imports and payments of government foreign debt, and are above the international adequacy standard of about 3 months of imports.

The central bank assessed that forex reserves are capable to support external sector resilience and macroeconomic and financial system stability. Going forward, BI viewed forex reserves to remain adequate, supported by stability and sound economic prospects.

Earlier, Bank Indonesia make a fourth straight cut during this year, after decided cut the BI 7 days reverse repo rate (BI-7DRR) by 25 bps to 5 percent. The central bank also cut the Deposit and Lending Facility by 25 bps to 4.25 percent and 5.75 percent, respectively.

BI’ Governor Perry Warjiyo, said the policy is consistent with inflation estimation and return on the domestic financial investment. He explained, this policy was also made by paying attention to external and internal situations.

Externally, said the governor, global economic growth has been slower, although financial market uncertainty has eased slightly after the United States (US) – China trade agreement in October 2019. The weakening of global economic growth is influenced by decline in trade volume due to tensions between US and China.

He noted, the US economy is also slowing down due to the declining confidence of economic actors. Similar thing also occurred in Europe, Japan, China and India. This condition, he adds, had an impact on the decline in global oil and commodity prices, which subsequently led to weak inflationary pressures.

“Various countries responded to this situation by loosening monetary policy and providing fiscal stimulus,” Warjiyo asserted.

From the domestic side, export growth slightly improved amid global demand and declining global commodity prices. The improvement was influenced by manufactured export products such as motor vehicle exports to ASEAN countries and gold exports which grew positively.

In the next round, the policy mix pursued by BI and the government is expected to maintain the Indonesian economic growth. In 2019, economic is targeted to grow in the range of 5.0 – 5.4 percent and 5.1 – 5.5 percent in 2020.

Written by Staff Editor, Email: theinsiderstories@gmail.com