Bank Indonesia announced that Indonesia's foreign exchange reserves increased to 140.3 billion US dollars at the end of February. Previously in the previous month, it was 139.4 billion dollars, which is good news for Indonesia's economic growth.

"Tax receipts and withdrawals from foreign government loans had an impact on increasing the position of forex reserves in February 2023," said the Executive Director of the Communication Department of Bank Indonesia on Tuesday, Erwin Haryono.

This figure is above international adequacy standards and can finance 6.2 months' worth of imports. The reserve assets remain adequate, but it adds support by a solid domestic economic outlook. This also aligns with the policy responses to maintain the system.

Economists also add that there will also be financial system stability because of this, adding support for the national economic recovery process. Bank Indonesia's focus is now not only on forex reserves but also on Rupiah digital updates.

February 2023 Foreign Exchange Reserves Increase Again, Bank Indonesia Leaves Benchmark Interest Rate Unchanged

Bank Indonesia has just reported an increase in foreign exchange reserves for February 2023. With these foreign exchange reserves, it is stated that this can support external sector resilience and maintain Indonesia's macroeconomic and financial system stability.

And BI still has other plans. In Bank Indonesia's view that these foreign exchange reserves remain adequate and are supported by stability and economic prospects, various policy responses in maintaining macroeconomic stability will continue to be emphasized.

This aims to make foreign exchange reserves support the process of national economic recovery. With the condition of the country's foreign exchange reserves which are still relatively high.

Bank Indonesia's expectations for the benchmark interest rate are also different. According to Bank Indonesia, the benchmark interest rate of 5.75 per cent will guide inflation to lower.

Bank Indonesia sees that this benchmark can target to have both core and headline inflation back within the central bank's target this year. Bank Indonesia has a target for a year-on-year inflation range of 2 to 4%. However, Rupiah moved back to its fundamental value.

Economists see that inflation is not a significant concern for Indonesia. The Rupiah did start weakening again in 2023. Since 2023, markets seemed to expect more base point rates to hike, and Bank Indonesia could focus on cutting rates later this year.

Now the speculation is regarding the Fed, which will likely raise its interest rate to nearly six per cent. This is due to the strong consumer demand and a tight labour market. It forces the central bank to battle inflation for extended periods, possibly until June 2023.

Even though the Economy to Grow is 5.1%, Digital Rupiah Will Be Issued

In connection with the development of the Indonesian economy, which has made inflation not a concern for Bank Indonesia, now the focus of this central bank is starting to lead to something different.

Bank Indonesia is now focusing on releasing and issuing the Central Bank Digital Currency (CBDC). It is planned that the Garuda Digital project will begin development in July 2023.

Bank Indonesia conveyed this through BI Governor Perry Warjiuo at the High-Level Seminar: ASEAN Matters Epicentrum of Growth. So, in July, project design will begin.

The development of this digital Rupiah design took around 1.5 years. This will later be encrypted and recorded in the Digital Rupiah Treasure. The result of this currency will be in the form of blockchain technology or distributed ledger technology, with three stages.

It was stated that its first development stage was wholesale Digital Rupiah. After that, a Digital Rupiah wholesale expansion will be carried out to support monetary operations and financial market development. And the last is wholesale interaction with retail.

Bank Indonesia has a broader focus now following successful currency development. This includes the development of Rupiah Digital, which is planned to be released in July 2023. However, the country's foreign exchange reserves have also grown.