Indonesia's Foreign Exchange Reserves Fall to US$141.3 Billion in January 2022: Here's Why!

Indonesia's foreign exchange reserves decreased again at the end of January 2022. Bank Indonesia (BI) reported that foreign exchange reserves during that period amounted to US$141.3 billion.

This position is down 2.48% from the foreign exchange reserve level in December 2021, which was US$144.9 billion (month-to-month). Despite the decrease, the central bank considers the foreign exchange reserve position to remain high.

The decrease in the foreign exchange reserve position in January 2022 was influenced, among other things, by the need for government foreign debt payments. Furthermore, this decrease was influenced by a reduction in banks' foreign exchange placements at Bank Indonesia, anticipating the need for foreign exchange liquidity in line with the improvement in economic activity.

BI noted that the foreign exchange reserves were equivalent to 7.6 months of import financing or 7.4 months of import and government foreign debt payments. Furthermore, the foreign exchange reserve position is above the international adequacy standard of around three months of imports.

BI assesses that these foreign exchange reserves are able to support the resilience of the external sector. Indonesia's foreign exchange reserves are also considered capable of maintaining macroeconomic and financial system stability.

Looking ahead, BI views foreign exchange reserves as remaining adequate. This is supported by the maintained stability and economic prospects, along with various policy responses in driving economic recovery.