Executive Director of the Communication Department of Bank Indonesia (BI) Onny Widjanarko remarked in Jakarta on Thursday that the drop in foreign exchange reserves in May 2019 was chiefly influenced by the payment of government external debt and placement of foreign exchange.
Placement of foreign exchange banking at BI reduced in anticipation of foreign exchange liquidity requirements linked to the cycle of dividend payments for several foreign companies and ahead of the Lebaran holidays.
Widjanarko elaborated that Indonesia's foreign exchange reserves was equivalent to financing of 6.9 months of imports or 6.7 months of imports and payment of government external debt that is well above the international standard of reserve adequacy of three months of imports.
BI views that the position of official reserve assets is able to support the external sector resilience and maintain macroeconomic and financial system sustainability.
Going forward, BI expects the official reserve assets to remain adequate, backed by confidence in the stability and upbeat outlook of the domestic economy as well as export performance that remains positive.
EDITED BY INE