Indonesia's Foreign Exchange Reserves Fall US$1.3 Billion as Rupiah Weakens

Indonesia's foreign exchange reserves dipped by US$1.3 billion to US$144.9 billion by the end of May 2026, according to Bank Indonesia (BI). This decrease occurred despite the issuance of government global bonds and revenue from taxes and services. The central bank cited government external debt payments and its own measures to stabilize the rupiah against global financial market uncertainty and seasonal domestic demand for foreign currency as key influences.

BI Communications Department Executive Director Ramdan Denny Prakoso stated that the reserves remain robust, equivalent to financing 5.6 months of imports, or 5.5 months when including government debt payments. This level comfortably exceeds the international adequacy standard of three months of imports. "Bank Indonesia views the foreign exchange reserves as capable of supporting external sector resilience and maintaining macroeconomic and financial system stability," Denny said.

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The development of foreign exchange reserves in May 2026 was influenced by the issuance of government global bonds as well as tax and service revenues, amid government external debt payments and Bank Indonesia's rupiah stabilization measures in response to heightened uncertainty in global financial markets and seasonal domestic demand for foreign exchange.

BI expressed confidence in the resilience of Indonesia's external sector, bolstered by these reserves and anticipated foreign capital inflows. These inflows are expected to continue, driven by positive investor perceptions of the country's economic outlook and attractive investment returns. However, the rupiah weakened to Rp18,129 per U.S. dollar on June 8, 2026.

Analysts suggest the rupiah could fall further, potentially reaching Rp19,000 by the end of June. Director of PT Traze Andalan Futures, Ibrahim Assuaibi, attributed the depreciation to growing investor concerns regarding President Prabowo's extensive policy agenda, including the free nutritious meals program, the Red and White Village Cooperative project, and increased fuel subsidies.

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Bank Indonesia views the foreign exchange reserves as capable of supporting external sector resilience and maintaining macroeconomic and financial system stability.