Indonesia’s Reserves Jump to Near Record on Bond Sales

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Indonesia’s foreign reserves surged to near a record after the government raised about $3 billion last month from the sale of global bonds, according to a person with knowledge of the matter.

Foreign exchange reserves likely rose by $2 billion in January to above $131 billion, said the person, who wasn’t authorized to speak publicly and asked not to be identified. The stockpiles were also helped by $1 billion of net foreign fund inflows into the nation’s sovereign bonds, the person said.

Junanto Herdiawan, a spokesman for the central bank, said he couldn’t confirm the reserves number, saying the data would be announced as scheduled. Bank Indonesia is due to release the reserves data Friday.

Near-record reserves will provide Indonesia’s central bank more firepower to deal with the market volatility stemming from the current outbreak of novel coronavirus and its impact on the global economy. Bank Indonesia has pledged to step up interventions in the bond, foreign exchange and domestic non-deliverable forwards markets to shield the nation’s currency and bonds.

“The need to pile up the reserves remain,” said Dian Ayu Yustina, a Jakarta-based analyst at PT Bank Danamon. “But with non-reserves intervention tools such as domestic non-deliverable forwards, coupled with easing volatility, it’s less urgent.”

Bank Indonesia’s recent market intervention and bond purchases were a signal to calm investors, Yustina said.

Indonesia’s reserves stood at $129.2 billion in December and reached a record $132 billion in January 2018, data from the central bank show. The reserves tumbled to a two-year low in September 2018 after the central bank dipped into the stockpile to shield the rupiah from a global emerging market rout.

Indonesia sold $2 billion of dollar-denominated notes and raised another 1 billion euros selling bonds in Europe to finance its budget deficit in 2020.

To contact the reporter on this story: Rieka Rahadiana in Jakarta at rrahadiana@bloomberg.net

To contact the editors responsible for this story: Thomas Kutty Abraham at tabraham4@bloomberg.net, Stephanie Phang

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