Forex Reserves Hit $111.9 Billion in December, Cushioning Weak Rupiah


JANUARY 08, 2015

Jakarta. Indonesia’s foreign exchange reserves rose 0.7 percent last month on the back of oil and gas revenue, providing the country with an additional buffer to shield from potential capital outflow.

The reserves rose to $111.9 billion at the end of December 2014, up from $111.1 billion a month earlier and $12.5 billion from the position a year earlier at $99.4 billion, data released by Bank Indonesia showed on Thursday.

Government revenue in foreign exchange from the oil and gas trade exceeded necessary foreign debt repayments and has helped to stabilize the falling rupiah, Bank Indonesia said in a statement.

“All in all, the strengthening of [foreign exchange] ‘firepower’ has been one of BI’s priorities to weather potential external risks ahead,” Mandiri analyst Fath Aliansyah Budiman said in a report.

Economists said the central bank had intervened heavily in the currency market when the rupiah hit 12,900 against the US dollar on Dec. 16, the lowest level since August 1998.

The currency fell 1.7 percent on the day — its biggest one-day drop in more than four months.

The currency ended the month at 12,440 against the greenback.

At the current level, the central bank predicts the country’s foreign exchange reserves could finance more than six months’ worth of imports and debt payments.

The central bank typically maintains its reserves to support three months of imports and debt payments.

“Bank Indonesia sees the accumulated foreign exchange reserves can support external resilience and maintain economic growth sustainability,” the central bank said in its statement.

Fath said that improving foreign reserves sent positive signals to the market, which was seeking signs of improvement in the country’s trade balance.

The Jakarta Composite Index rose 0.09 percent to 5,211,83 on Wednesday, fueled by gains in property, agriculture and trade and services companies.

The country’s 10-year bond yield fell to 7.9869 percent from 8.0278 percent a day earlier.

The bonds yield move inversely to price.