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The nation’s foreign exchange (forex) reserves at Bank Indonesia (BI) slid by US$910 million within one month due to the central bank’s intervention in the currency market in efforts to maintain a stable rupiah amid significant sell-offs of Indonesian assets, an official said.
“Forex reserves slid due to the large amount of capital outflows, which made BI intervene to keep the currency rate stable, so that the currency did not depreciate excessively,” BI deputy governor Hartadi A. Sarwono said in a text message on Friday.
Hartadi added that the lowering of forex reserves was also a factor of government foreign debt service obligations.
BI’s latest statement showed that the nation’s forex reserves slid to $95.3 billion as of Jan. 31, compared to $96.21 billion at the end of 2010.
The current forex reserves “is equivalent of 6.3 months of import bills and the government’s foreign debt payment”, BI spokesman Difi A. Johansyah said in the statement.
Hartadi had previously said the standard or normal level of the forex reserves is four months of the country’s imports and government’s foreign debt payment. Therefore, despite the drop of the current forex reserves, the value is still higher than standard.
BI’s forex reserves swelled over 45 percent in 2010, mainly due to surging capital inflows as the nation’s stock and debt markets outperformed major global markets, attracting higher returns for foreign investors who pumped in a net $13 billion throughout the year.
Mounting inflationary pressures have resulted in sell-offs in the country’s equities and debt markets, which has resulted in the rupiah’s depreciation. However, according to BI data, the national currency appreciated by nearly 1 percent in January, closing the month at Rp 9,057 against the US dollar.
Foreign investors sold about Rp 4 trillion (US$444.4 million) worth of stocks and Rp 790 billion of government debt papers throughout the month, dropping foreign ownership of Indonesian assets in the IDX to 58 percent, 29.4 percent in government bonds (SUN) and 23 percent in BI certificates (SBI).
The 10-year government bond gained, with the bond market yield falling by one basis point to 8.91 percent, according to closing prices from the Inter Dealer Market Association.
The benchmark Jakarta Composite Index (JCI) closed January as the biggest loser among Southeast Asia’s major indexes, slumping by almost 9.5 percent in a month.
But the sell-offs discontinued as BI hiked its benchmark rate 25 basis points Friday — a positive note as indicated by gains in the nation’s stocks, bonds and currency markets. The JCI closed up 0.44 percent on Friday to 3,496.
Elsewhere, Asian stocks rose, driving the MSCI Asia Pacific Index to a two-week high, as Japanese company earnings improved and Nippon Steel Corp. announced a takeover, Bloomberg reported.
The MSCI Asia Pacific Index rose 0.6 percent to 139.87 as of 7:20 p.m. in Tokyo, on course for its highest close since Jan. 19.
Japan’s Nikkei 225 Stock Average gained 1.1 percent. New Zealand’s NZX 50 Index rose 0.5 percent. Thailand’s SET Index increased 0.4 percent. India’s Sensitive Index plunged 2.4 percent after Prime Minister Manmohan Singh said inflation poses a “serious threat” to the nation’s growth momentum.
Meanwhile, the rupiah climbed to a four-week high of Rp 8,993 against the US dollar as of 4:40 p.m. Elsewhere, the peso advanced 0.8 percent to 43.765 per dollar, the baht strengthened 0.9 percent to 30.78 and India’s rupee strengthened 0.4 percent to 45.60 per dollar.
source: tht jakartapost.com
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