Weak Rupiah Forces Bank Indonesia To Cut Reserves
The Indonesian rupiah fell to its lowest level since the 1997-98 Asian financial crisis last week, making the Bank Indonesia to use more aggressive monetary policy. Central bank of Indonesia has drained almost 10% from foreign reserves this year, the most among Asia’s largest economies, to support the rupiah amid a rout in emerging markets (EM).
According to the central bank data, Indonesia’s reserves fell to $117.9 billion in August (the lowest since January 2017). Still, it is enough to finance 6.6 months of imports and servicing of the government’s external debt.
Meanwhile, the Philippines has cut its reserves by almost 5%, while reserves in India have fallen more than 2%. Malaysia and South Korea have managed to boost their reserves even as their currencies also weakened.