By the end of September 2017, Indonesia's foreign exchange reserves stood at USD $129.4 billion, slightly up from USD $128.8 billion in the preceding month, hence hitting a new all-time record. Indonesia's central bank (Bank Indonesia) said this increase was primarily attributed to foreign exchange receipts from tax revenues, government oil & gas export proceeds, the withdrawal of government foreign loans as well as the auction of Bank Indonesia foreign exchange bills.
Meanwhile, these above-mentioned receipts surpassed uses of foreign exchange - primarily for repayments of public foreign debt and maturing Bank Indonesia foreign exchange bills - and therefore a new record-high could be achieved in September 2017.
Bank Indonesia stated that the nation's foreign exchange reserves position at end-September 2017 can adequately cover 8.9 months of imports or 8.6 months of imports and servicing of government external debt repayments, which is well above the international standards of reserve adequacy at three months of imports.
This also means that Bank Indonesia has plenty of ammunition to defend the rupiah which is currently under pressure - like most other emerging market currencies - amid severe US dollar strength. US dollar strength is caused by rising expectations of another US interest rate hike before the end of 2017 and US tax reforms.
Bank Indonesia Governor Agus Martowardojo said the record high foreign exchange asset position of Indonesia reflects the improving conditions in the Indonesian economy.
Source: Indonesia Investments