Bank Indonesia's Foreign Exchange Reserves Capacity to Finance Imports and Government Debt Continues to Decline

Bank Indonesia reported that foreign exchange reserves increased by US$ 315.85 million (0.27%) in October 2018 to US$ 115.16 billion, equivalent to Rp 4.73 trillion, compared to the previous month. This increase was the first in nine months and the second time this year. Significant pressure on the rupiah had depleted BI's foreign exchange reserves throughout the year.

These BI foreign exchange reserves are still sufficient to finance 6.2 months of imports and government foreign debt payments. This ability/capacity of foreign exchange reserves to finance imports and government foreign debt is the lowest this year. However, the figure remains above the international standard of 3 months. At its highest level of US$ 131.98 billion in January 2018, BI's foreign exchange reserves were able to finance up to 8.2 months of imports and government foreign debt payments.

The increase in foreign exchange reserves this time was supported by foreign exchange receipts from oil and gas exports and the repayment of foreign debt exceeding foreign exchange needs to finance imports and government foreign debt payments, as well as for rupiah exchange rate stabilization. According to BI Executive Director Agusman, these foreign exchange reserves are still capable of supporting external sector resilience and maintaining macroeconomic and financial system stability.