The position of official reserve assets was equivalent to finance 7.2 months of imports or 7.0 months of imports and servicing government’s external debt, which is well above the international adequacy standard of three months imports.
"Bank Indonesia considers that the official reserve assets are ample to finance import and debt service payments as well as the need to stabilize the Rupiah exchange rate," the central bank said in a press statement on Tuesday, April 7, 2020.
The decline in official reserve assets in March 2020 was influenced by, amongst others, government external debt payments and stabilization of the Rupiah exchange rate amidst extraordinary conditions due to panic in the global financial market triggered by a rapid and widespread effect of covid-19 pandemic throughout the world.
The fear has induced capital outflow and amplified exchange rate pressures on the Rupiah, especially in the second and third week of March 2020.
"Stabilization measures and policy mix reinforcement took by Bank Indonesia, as well as close coordination with the Government and the Financial Services Authority (OJK), have made market conditions gradually recovered and market mechanisms have resumed since the last week of March 2020," the central bank stated.
"Bank Indonesia views that the Rupiah exchange rate is relatively adequate and fundamentally undervalued, and is expected to move stably and tend to appreciate towards Rp15,000 per US dollar by the end of 2020," the central bank stated,
In addition, the central bank will continue to maintain reserve assets adequacy to bolster external resilience and preserve macroeconomic and financial system stability.