Global Economics & Markets Research

Email: GlobalEcoMktResearch@uobgroup.com
URL: www.uob.com.sg/research

Macro Note
Indonesia: Foreign Reserves Fell Second Month In A Row

Monday, 11 December 2017
Enrico Tanuwidjaja
Economist
EnricoTanuwidjaja@uob.co.id
ƒƒ Bank Indonesia (BI) reported that Indonesia’s official reserve assets position stood at
USD125.97bn as of end-November 2017, lower than October 2017 level of USD126.55bn,
and fell for two months in a row from its record high level of USD129.4bn recorded in
September 2017. Despite remaining at healthy levels, the import cover ratio decline tad
lower to 8.4 months of imports at the end of November 2017 from 8.6 times previously
(Or, 8.1 months of imports and servicing of government external debt repayments, down
slightly from 8.3 in October). BI considered the position of official reserve assets is able to
give support to the external sector resilience and maintain the sustainability of Indonesian
economic growth.

ƒƒ BI cited the reason for the decline in the foreign reserves in November 2017 was mainly
due to repayment of government external debt and to stabilize the rupiah in accordance
with its fundamental. Another factor explaining the slight decline was due to lower banks’
foreign currency term deposits to BI in line with the residents’ obligation to repay their foreign
currency liabilities. BI ended the statement by saying that “it will continue to maintain reserve
adequacy to support preserved macroeconomic and financial system stability ... supported
by a remained positive domestic economic conditions, improved export performance, and
conducive global financial market development.”

Figure 1. Indonesia FX Reserves Fell Two Months in A Row From Its Record High

Source: BI, UOB Global Economics & Markets Research

140
USD billion 2013 Taper Renminbi parity
130
Tantrum re-centering
120

110

100

90

80

70

60
Jan 10 Oct 10 Jul 11 Apr 12 Jan 13 Oct 13 Jul 14 Apr 15 Jan 16 Oct 16 Jul 17

Disclaimer: This analysis is based on information available to the public. Although the information contained herein is believed to be reliable, UOB
Group makes no representation as to the accuracy or completeness. Also, opinions and predictions contained herein reflect our opinion as of date of the
analysis and are subject to change without notice. UOB Group may have positions in, and may effect transactions in, currencies and financial products
mentioned herein. Prior to entering into any proposed transaction, without reliance upon UOB Group or its affiliates, the reader should determine, the
economic risks and merits, as well as the legal, tax and accounting characterizations and consequences, of the transaction and that the reader is able
to assume these risks. This document and its contents are proprietary information and products of UOB Group and may not be reproduced or otherwise.
Singapore Company Reg No. 193500026Z