JAKARTA: The country’s foreign exchange (forex) reserves are reported to have declined by more than US$2 billion to around $103 billion in September from $105.3 billion in August, according to unofficial data from Bank Indonesia (BI).
However, BI Governor Agus Martowardojo insisted that the forex figure was subject to changes because not all export earnings and debt repayments were calculated.
“It is a dynamic situation because we are still looking to receive income from oil exports and at the same time there are still repayments of external debts and market intervention [to smooth out the rupiah volatility],” he said to lawmakers at the House of Representatives’ Commission XI on Monday.
Agus — along with Finance Minister Bambang Brodjonegoro and Central Statistics Agency (BPS) head Suryamin — discussed the proposed 2016 state budget during the meeting.
Agus said that external debt repayments were mostly recorded by the private sector, not the government. “The debt figure within the private sector is still quite high. They stem from loans taken out in 2011 that are maturing this year,” he told reporters on the sidelines of the meeting.
BI defines private sector external debts as those posted by banks and non-banking firms, while non-private sector external debts are those posted by the government and central bank.
If the upcoming official forex reserves data shows a decline, it will be the seventh consecutive drop this year since March. In March, the forex reserves slipped for the first time in 2015 to $111.6 billion from $115.5 billion in February.
BI previously stated that the reserves in August were still sufficient to finance 7.1 months of imports or 6.9 months of imports and repayment of the government’s external debts, well above the safe level of three months of imports.
The central bank has also stated during numerous occasions that it will remain active in the market to smooth out rupiah fluctuations against the US dollar, a move that is expected to deplete forex reserves even further.
According to data from Bloomberg, the rupiah continued its losing streak on Monday, ending at 14,486 per US dollar, weakening by 0.8 percent from last Friday.
When compared to the beginning of the year, the currency has so far depreciated by 16.9 percent.
At the meeting, Agus said the global situation remained uncertain and that a new forex forecast should be a focus within the deliberation of the 2016 state budget.
BI has recently set a new rupiah exchange rate forecast for the budget, of between 13,400 and 13,900 per US dollar, which is weaker than the government’s rupiah assumption of 13,400 per dollar.
Contacted separately, I Kadek Dian Sutrisna Artha, director of the Institute of Economic and Social Research (LPEM) at the University of Indonesia, predicted that the forex reserves would continue to drain by year-end.
“We now have limited forex sources with falling commodity exports, falling commodity prices and a slowdown in capital inflows. At the same time, BI will still have to stabilize the currency, meaning that it will use reserves for market interventions,” he said.
