JAKARTA: Indonesia’s forex reserves dropped by $1.3 billion in May to $144.9 billion, their lowest in nearly two years, following its interventions in the currency market, Bank Indonesia (BI) said on Monday, raising market concerns as pressures on the rupiah mount.
The currency fell on Monday to a new historic low of 18,170 a dollar, and has been under pressure as a result of a wide range of investor worries, including President Prabowo Subianto’s big spending plans, a ballooning fuel subsidy budget following the Iran war, doubts about the central bank’s autonomy and new commodity export policies.
In the year to May, Indonesia’s reserves have fallen by $11.6 billion as the central bank stepped up currency intervention to defend the rupiah, which has fallen to fresh record lows almost every day since late March despite the government’s $3.5 billion sale of U.S. dollar- and euro-denominated bonds last month.
BI said the reserve level at the end of May was equivalent to 5.6 months’ worth of imports, above the international standard of three months and “adequate to support external resilience and maintain macroeconomic and financial system stability”.
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