Indonesia's New Export Rules May Not Boost Reserves, Economist Says

Indonesia's recent changes to its export-generated foreign exchange (DHE) rules are unlikely to automatically bolster the nation's foreign exchange reserves, according to Yusuf Rendy Manilet, a researcher at CORE Indonesia. He explained that foreign exchange deposited in special accounts at state-owned banks still belongs to the exporters, not the central bank.

Manilet clarified that while the DHE policy increases the supply of dollars within the domestic banking system, it only becomes part of Bank Indonesia's reserves if it is converted or transacted with the central bank. "This policy's impact is more accurately described as strengthening domestic foreign exchange liquidity and deepening the domestic dollar market, rather than directly multiplying foreign exchange reserves," he stated on Wednesday, May 26, 2026.

He further noted that the DHE policy acts as an additional layer of defense for the rupiah. However, it cannot substitute for more significant fundamental improvements, such as enhancing the trade balance, managing capital flows, and bolstering government fiscal credibility.

Conversely, Finance Minister Purbaya Yudhi Sadewa expressed confidence that the new DHE regulations would increase foreign exchange reserves. He described the decision as "very bold and I think good for us" because previously, DHE could be placed in any Indonesian bank as long as it was converted to rupiah, yet reserves did not grow. Sadewa observed that businesses tended to convert their earnings to rupiah, channel them to smaller banks, and then send them abroad, preventing reserves from increasing despite a consistent trade balance surplus. The new rules, effective June 1, 2026, mandate exporters to deposit foreign exchange in state-owned banks, with specific retention periods and conversion limits.