Jakarta. The foreign exchange reserves have remained unchanged at $132.2 billion at the end of August from a month earlier, thanks to tax and oil and gas revenues, Bank Indonesia, the country's central bank, said on Wednesday. 

The result halted eight consecutive months of decline and reflected Indonesia's resilience against rising global financial market volatility. 

"The position of official reserve assets was sufficient to finance 6.1 months of imports or six months of imports and servicing the government's foreign debt, and was significantly in excess of the international adequacy threshold of three months of imports," Erwin Haryono, Bank Indonesia's executive director and head of the communication department, said in a statement. 

"Bank Indonesia deems the official reserve assets position enough to bolster external resiliency and preserve macroeconomic and financial system stability," Erwin said. 

Ample reserves have helped the country defend the rupiah, which has only depreciated by 3.4 percent this year. It was the second-best performance among emerging countries' currencies, after the Vietnam dong, which declined 2.4 percent in the same period.  

Erwin said that the central bank uses some reserves for "rupiah stabilization in line with persistently elevated global financial market uncertainty."

In the future, he said the central bank believed foreign exchange reserves would remain at a sufficient level, thanks to a robust economic prospect. 

The central bank expected Indonesia to grow by close to the upper bound of its target of 4.5-5.3 percent this year, thanks to improvements in consumer confidence, retail sales and manufacturing performance.

The largest economy in Southeast Asia expanded 5.44 percent in the second quarter this year, compared to the same period last year. It accelerated from the 5.01 percent growth recorded in the first quarter.

Indonesia also increased the subsidized fuel prices by up to 32 percent last week. While the increase would inevitably increase inflation, it also ensure this year's state budget deficit for this year and next year would remain within acceptable levels, avoiding any negative sentiments that could trigger reserves-eroding capital outflow. 

"Importantly, the fuel price hike is more supportive of 2023 finances than 2022," Radhika Rao, a senior economist at DBS Group Research, wrote in a recent report. 

"The mandate to lower the 2023 fiscal deficit back to -3 percent of GDP and energy subsidies cut by a third suggests a fuel price adjustment was baked into next year's math. With elections looming in early 2024, the window to undertake this politically sensitive decision was also fast narrowing," Rao said. 

Bank Indonesia had preemptively increased its benchmark interest rate by 25 basis points to 3.75 percent last month in anticipation of the fuel price increase.

As the inflation could rise by 100 basis points following the fuel price increase, Rao expected Bank Indonesia "to tighten policy by 25bp each in the remaining meetings of the year, to take the end-year rate to 4.75 percent, before drawing a pause."