Indonesia's Foreign Exchange Reserves Increase To 137 Billion US Dollar Supported By Surplus Balance Of Payments

Illustration (Photo: Doc. Between)

JAKARTA - Bank Indonesia (BI) released foreign exchange reserves at the end of the first quarter of 2021 amounting to USD137.1 billion. This figure increased compared to the fourth quarter of 2020 of USD135.9 billion.

To note, the position of official reserve assets is equivalent to financing 9.7 months of imports and repayment of government external debt, well above international adequacy standards.

Head of BI Communications Department Erwin Haryono said the positive response was supported by Indonesia's Balance of Payments (BOP) which posted a surplus of US$4.1 billion during the first three months of this year.

"The surplus comes from a capital and financial account surplus that exceeds the low current account deficit," he said in a press statement on Friday, May 21.

In detail, the current account recorded a deficit of USD1.0 billion. This figure is inversely proportional to the position of the fourth quarter of 2020 which surplus of 900 million US dollars.

Meanwhile, capital and financial transactions in the first quarter of 2021 recorded a surplus of USD5.6 billion. The achievement accelerated from the position in the fourth quarter of 2020 with a deficit of USD1.0 billion.

"Foreign capital inflows in the form of portfolio investment are increasing in line with investors' positive perception of the prospect of domestic economic improvement that remains maintained amidst ongoing global financial market uncertainty," erwin said.

Portfolio investment recorded net inflows of USD4.9 billion, higher than the surplus in the previous quarter of USD2.0 billion, primarily driven by the issuance of global bonds and increased foreign capital inflows in the stock market.

Direct investment also recorded a surplus of USD4.1 billion, continuing the surplus in the previous quarter of USD4.2 billion, primarily in the form of equity capital.

Meanwhile, other investment accounts recorded a lower deficit, partly due to a decrease in overseas deposit placements

"Moving forward, Bank Indonesia will continue to monitor global economic dynamics that may affect the BOP outlook and continue to strengthen the policy mix in order to maintain economic stability with the government," erwin concluded.