Bank Indonesia's Foreign Exchange Reserves' Valuable Securities Shrink by US$14 Billion

Bank Indonesia's (BI) foreign exchange reserves had shrunk by US$10.36 billion (7.96%) to US$119.84 billion by the end of June 2018, compared to US$130.19 billion at the end of 2017. Intervention by the central bank, in response to the rupiah's depreciation due to foreign investors exiting the domestic financial market, was one of the reasons for the decline in the central bank's foreign exchange reserves.

Based on their composition, BI's foreign exchange reserves in the form of securities decreased by US$14.29 billion (12.49%) to US$116.16 billion in the first six months of the year, from US$114.49 billion in December of the previous year. Meanwhile, reserves in the form of foreign currency notes and deposits increased by US$4.12 billion (45.26%) to US$13.24 billion, from US$9.11 billion.

Despite the decrease, BI's foreign exchange reserves could still finance 7.2 months of imports, or 6.9 months of imports and government foreign debt payments. This figure is still above the international adequacy standard of around three months of imports. The central bank's foreign exchange reserves also remain capable of supporting external sector resilience and maintaining macroeconomic and financial system stability.