Indonesias rising forex reserves may mitigate global risk: Economist

Jakarta (ANTARA News) – Indonesias foreign exchange reserves, which rose significantly to US$119.9 billion as of Feb 28, will be able to mitigate the risk of global economic uncertainty, particularly the imminent Fed rate hike, an economist said.

The foreign exchange reserves, which increased by $3 billion compared to a month earlier, was the result of solid net exports, particularly oil and gas exports, and the rupiahs stable exchange rate, Mandiri Sekuritas economist, Leo Rinaldy, said here on Wednesday.

Because of the stable rupiah, Bank Indonesia did not do much to intervene in the money market, he stated.

“Foreign exchange reserves can mitigate the risk of external headwinds in the future, as it is more than enough to finance imports for three months,” he noted while disclosing the results of his research.

The current foreign exchange reserves can also offset minimum imports and sudden capital flights, which reach about $90 billion, he added.

The foreign exchange reserves may increase further if $83.1 billion from swap deals between Indonesia and several countries is incorporated to it, he remarked.

Bank Indonesia (BI) earlier stated that the countrys foreign exchange reserves increased due to a rise in tax receipts and foreign exchange earnings from oil and gas exports, withdrawal of the governments offshore loans, and proceeds from the auction of foreign currency-denominated Bank Indonesia Certificates (SBBI).

BI Deputy Director for Economic and Monetary Policies, Riza Tyas, said that the foreign exchange reserves will be at risk in March, as the Federal Reserve will most likely raise its interest rate and BI needs to anticipate the volatility of the rupiahs exchange rate.

Source: Antara News