BI Governor: Forex reserves remain strong to anticipate rupiah weakening

Jakarta - Bank Indonesia (BI) Governor Perry Warjiyo has emphasised that the country’s foreign exchange reserves remain robust in anticipating the risk of a weakening rupiah exchange rate, so the public need not worry. “So don’t worry, the amount of foreign exchange reserves is more than sufficient,” Perry said during a doorstep interview at the Indonesian Parliament building in Jakarta on Tuesday. He explained that the adequacy of foreign exchange reserves is always measured using an indicator issued by the International Monetary Fund (IMF), namely ‘reserve adequacy’. Through this indicator, BI calculates the amount of foreign exchange reserves needed to anticipate pressure on the rupiah, including if a significant exchange rate depreciation occurs. “We measure this, and currently it is still more than 115 percent. So it is still more than sufficient. In addition, it is equivalent to around 6 months of imports,” Perry said. Amidst the exchange rate weakening, Indonesia’s foreign exchange reserves have continued to decline since late December 2025. Over the past five months, reserves have shrunk by 11.6 billion US dollars, or about 7.4 percent, from a position of 156.5 billion US dollars at the end of December 2025. At the end of May 2026, foreign exchange reserves were recorded at 144.9 billion US dollars, a decline of 1.3 billion US dollars from the previous month, in line with government external debt payments and rupiah exchange rate stabilisation. The decline occurred despite additional foreign exchange inflows from the government’s global bond issuance as well as tax and service revenues. According to BI, the foreign exchange reserve position at the end of May 2026 remained strong, equivalent to financing 5.6 months of imports or 5.5 months of imports and government external debt payments, and was above the international adequacy standard of around 3 months of imports. On Tuesday, through its Weekly Board of Governors Meeting, BI decided to raise the BI-Rate by 25 basis points to 5.5 percent. The central bank had recently raised the benchmark interest rate by 50 basis points at its Monthly Board of Governors Meeting on 19-20 May 2026. The BI-Rate increase in May 2026 marked the first adjustment after the benchmark rate was maintained at 4.75 percent since September 2025. Throughout 2025, BI previously cut its benchmark rate five times, with a total reduction of 125 basis points. BI is next scheduled to hold its Monthly Board of Governors Meeting on 17-18 June 2026.