Why DHE Rules Don't Automatically Strengthen Foreign Reserves

CORE Indonesia researcher Yusuf Rendy Manilet said that changes to the export proceeds (DHE) rules for natural resources do not automatically strengthen foreign reserves. He said foreign exchange held in special accounts at state-owned banks remains the property of exporters, not automatically becoming Bank Indonesia’s foreign reserves.

Yusuf explained that while DHE increases dollar supply in the domestic banking system, it does not automatically become part of BI’s foreign reserves unless converted or transacted with the central bank. “Thus, the policy’s impact should more accurately be described as strengthening domestic foreign currency liquidity and deepening the local dollar market, rather than directly doubling foreign reserves,” Yusuf said on Wednesday, 26 May 2026.

According to Yusuf, the DHE policy serves as an additional defensive layer for the rupiah. However, he noted that the rules cannot replace the need to improve larger fundamentals such as trade balance quality, capital flows, and government fiscal credibility.

Meanwhile, Finance Minister Purbaya Yudhi Sadewa believes the new DHE rules can boost foreign reserves. “It’s a bold decision, and I think it’s good for us because previously DHE could be placed in any Indonesian bank as long as it was converted to rupiah. But we saw our foreign reserves didn’t increase,” Purbaya said at the Jogja Financial Festival broadcast live via Lembaga Penjamin Simpanan’s YouTube channel on Friday, 22 May 2026.

According to Purbaya, businesses have traditionally converted their foreign exchange to rupiah, channeled it to smaller banks, and then sent it abroad. Thus, despite a persistent trade surplus, Indonesia’s foreign reserves have not increased.

Under the rules effective 1 June 2026, exporters must deposit foreign exchange in Himbara banks. The oil and gas industry must retain 30% for three months, while non-oil and gas industries must retain 100% for 12 months. The government also reduced the DHE foreign currency conversion limit from 100% to 50%.