Indonesia's forex reserves shrink as central bank intensifies intervention

Source: Xinhua| 2020-04-07 16:40:35|Editor: xuxin
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JAKARTA, April 7 (Xinhua) -- The foreign exchange (forex) reserves of the Indonesian central bank, Bank Indonesia, dropped in March as the lender has intensified intervention in the financial market to shore up rupiah.

Bank Indonesia's foreign exchange reserves drifted down to 121.0 billion U.S. dollars in March from 130.4 billion dollars in February, the bank said in a statement on Tuesday.

"The shrinkage of the forex reserves in March 2020 was factored by the payment of foreign debts and stabilization of rupiah amid an extraordinary situation due to the panic in the financial market because of the COVID-19 pandemic," Bank Indonesia said in the statement.

The COVID-19 pandemic has worsened the global economy, making investors prefer holding the greenback as a safe haven, and this condition has raised pressures on the emerging market's currencies, including rupiah.

"The amount of forex reserves edges down, because there is a need to conduct intervention" in the financial market, Governor of Bank Indonesia Perry Warjiyo said a day earlier.

The forex reserves are sufficient to support 7.2 months of imports, and 7.0 months of imports and payment of the government short-term debts, the statement said.

The figure was higher than the international threshold of three months of imports, it said.

Capital outflows have made the Indonesian currency depreciate against the greenback by 18.21 percent this year as it was traded at 16.410 on Tuesday, according to the lender.

Bank Indonesia has vowed to intensify intervention in the foreign exchange and bond markets from the risks of global economic uncertainty in a bid to maintain the stability of rupiah and the country's bonds.