Indonesia’s foreign exchange reserves increased to US$127.76 billion as of the end of July compared to US$123.09 billion at the end of June, Bank Indonesia (BI) reported.
The increase was primarily attributable to foreign exchange receipts, among other from government’s issuance of global bonds, tax revenues and government oil & gas export proceeds, as well as auction of Bank Indonesia foreign exchange bills, said Bank Indonesia Communication Executive Director Agusman in a press release yesterday.
Agusman said that the foreign exchange receipts surpassed the uses of foreign exchange primarily for repayments of government external debt and Bank Indonesia foreign exchange bills matured during the period. Indonesia’s foreign exchange reserves as of the end of July covers 9,0 months of import or 8,7 months of import and servicing of government external debt repayments.
He added that the standing is well above the international standards of reserves adequacy at 3 months of imports Bank Indonesia considers the official reserve assets are able to strengthen the resilience of the external sector and maintain the sustainability of Indonesian economic growth, the statement said.
Bhima Yudhistira Adhinegara, an economist with Institute for Development of Economics and Finance (Indef), argued that the increase in foreign exchange reserves was of low quality.
"Quality foreign exchange reserves ought to be contributed by increased non-oil and gas imports, particularly industrial product exports," he told Tempo. According to him, an increase in foreign exchange reserves from financial sector such as bond issuance is prone decline.
"It is better to step up exports in the manufacture industry to strengthen foreign exchange reserves in the second half," he said.