JAKARTA (TheInsiderStories) – Indonesia’ foreign exchange (forex) reserves stood at US$138.8 billion in February 2021, slightly increase from the previous month of $138.0 billion, the central bank reported today. The position is equivalent to financing 10.5 months of imports or 10.0 months of imports and servicing of government external debt, and is above the international adequacy standard of around 3 months of imports.
Bank Indonesia (BI) assessed that the forex reserves are capable to support the external sector resilience and maintaining macroeconomic and financial system stability. The policymakers said, the increase in the position of foreign reserves in February 2021 was mainly influenced by the withdrawal of government loans and tax revenues.
While, the central bank said it was ready to intervene in the market to keep the weakening of Rupiah steady. On Friday, the local currency hit the four-month low as United States (US) bond yields rise and ended at 14,300 versus the Greenback. While, the Jakarta Composite Index fell 0.51 percent to 6,258 from the previous day.
Last month, to support the domestic economic and to stabilize the money market, the policymakers has cut seven days repo reverse rate to 3.50 percent. The central bank also took policy steps to maintain the exchange rate stabilization and strengthening the monetary operation strategy.
“This decision is consistent with the forecast of low inflation, the stable Rupiah, as well as a follow-up step to stimulate momentum for national economic recovery,” said the governor, Perry Warjiyo, in a virtual conference on Feb. 18.
The policymakers estimated the inflation rate during 2021 to remain under control within the 3.0 percent ± 1 percent target. Commenting on the forex data, economist from PT Bank Mandiri Tbk, Faisal Rachman, said in the next few months, the forex reserves are likely to fall followed the increase of US treasury yield, which triggers outflows and resulting a weakening of the Rupiah over the Greenback.
Therefore, he rated that a policy to stabilize the domestic currency rate by the central bank is needed, especially in the second quarter of 2021. As for the end of this year, Faisal projected that the Rupiah will be perched at 14,085 per US Dollar, up 3.25 percent from last year’ position at 14,543 per over the American Dollar.
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