Image: Reuters Berita 24 English - According to Bank Indonesia (BI) data released on Friday, Indonesia's foreign exchange reserves have...
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| Image: Reuters |
Berita 24 English - According to Bank Indonesia (BI) data released on Friday, Indonesia's foreign exchange reserves have dropped to their lowest level in a month since the epidemic began. The central bank has promised to act in the foreign exchange market to prevent imported inflation.
In July, reserves decreased by $4.2 billion to $132.2 billion as a result of public debt payments and currency intervention by the central bank, according to a statement from BI.
Since March 2020, when reserves plunged by $9.4 billion, that decline has been the most.
The reserve level was sufficient to ensure the stability of Indonesia's external and financial systems and was greater than the 3 months international standard for reserves. Since June 2020, the level had not been this low.
According to a BI official, the reserve level may increase in the remaining months of the year due to the return of capital to the debt and equity markets as well as possible reserves from trade surpluses and government plans to issue offshore bonds in the second half of 2022.
Edi Susianto, the head of BI's monetary management division, texted Reuters, "Going forward, I see that FX reserves will be highly secure."
In order to control the effect of the rupiah's depreciation on domestic inflation, according to Governor Perry Warjiyo, BI has been participating in currency markets. However, he said that BI was not aiming for a certain level of the exchange rate.
Last month, Indonesia's inflation rate increased to 4.94 percent, the highest level in seven years.
The rupiah has fallen against the dollar, along with other emerging market currencies, as the world's monetary system has tightened.
However, despite being down more than 4% so far this year, it is among the best performing currencies in emerging Asia as domestic dollar supply increased due to strong export revenues.
In the first half of 2022, Asia's foreign exchange reserves had their greatest six-month decrease in years, highlighting the authorities' resolve to defend their currencies against pressure from a strong U.S. dollar.
