Indonesia’s foreign-exchange reserves declined for the fifth consecutive month in May, reaching US$144.9 billion, marking the longest period of losses since 2018 (05/26).

The fall was driven by external debt payments and intervention efforts by Bank Indonesia to stabilise the rupiah amid global financial uncertainty.

Bank Indonesia Intervention Pressures Foreign Exchange Reserves

The continued drawdown reflects intensified market operations by Bank Indonesia in both currency and bond markets to support the rupiah.

The central bank acted as the currency weakened sharply and reached record lows against the US dollar.

The rupiah has fallen around 8% this year, adding pressure on policymakers to maintain financial stability.

Foreign Investors Pull Over US$3.5 Billion from Indonesian Stocks

Foreign investors have withdrawn more than US$3.5 billion from Indonesian equities, contributing to broader market weakness in Indonesia. The sell-off has intensified pressure on domestic financial markets.

The benchmark stock index has declined by more than 30% this year, reflecting sustained outflows and weaker investor sentiment.

Bond Yields Rise and Equity Markets Extend Losses

Indonesia’s 10-year bond yields increased by 26 basis points to 7.14%, the highest level since April 2025. This rise reflects continued market volatility and risk repricing.

The benchmark stock index also fell 2.5% amid a broader regional sell-off, while currency pressure remained a key driver of market movement.

Policy Coordination and Reserve Adequacy Remain in Focus

The government and Bank Indonesia have pledged to coordinate efforts to strengthen foreign investor confidence and support capital inflows.

One planned measure includes increasing interest paid on government deposits held at the central bank.

Despite recent declines, reserves remain sufficient to cover 5.5 months of imports and external debt servicing, according to Bank Indonesia.

PHOTO: FREEPIK

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