Foreign exchange (forex) reserves surged to US$127.9 billion in April on the back of the government’s issuance of US dollar-denominated bonds in the same month, Bank Indonesia announced Friday.
The current reserves level, an increase from $121 billion in March, is estimated to be sufficient to support 7.5 months of imports and to bear the payment for the government’s short-term debts, according to the central bank.
It is also deemed to be above the international adequacy standard of about three months’ worth of imports.
“The increase in forex reserves in April was due to the government’s global bonds issuance,” the central bank said in a statement.
The government sold dollar-denominated bonds worth $4.3 billion in early April to finance its widening budget deficit and fund its fight against COVID-19, which has impacted the economy.
The bond includes the longest-dated dollar bond ever issued by an Asian nation of 50-year tenure.
BI is of the view that the current reserve level is “strong enough” to support the country’s resilience to external factors, as well as to maintain macroeconomic and financial system stability.
Forex reserves dropped by around $9 billion in March when BI stepped up rupiah intervention amid pandemic-related capital outflows, as foreign investors dumped Indonesian assets of around Rp 120 trillion ($8.03 billion) and flocked to safe-haven assets.
The government expects a widening budget deficit of 5.07 percent as it struggles to finance the fight against the outbreak.
It has announced Rp 436.1 trillion worth of stimulus packages to boost healthcare spending, social spending and tax incentives, among others.