Indonesian Fragility Shown by Drop in Reserves Amid Rupiah Surge
- Reserves fell in October even as rupiah rebounded 7 percent
- U.S. jobs report spurs bets for Fed rate increase this year
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A drop in Bank Indonesia’s foreign-exchange reserves last month even as the rupiah led emerging markets to surge 7 percent highlights the nation’s vulnerability to an increase in U.S. borrowing costs.
The Indonesian central bank’s stockpile fell for an eight month, by $1 billion to $100.7 billion, according to figures released late on Friday. The decline was due to rising costs to service the government’s foreign debt and the use of reserves to stabilize the rupiah, the monetary authority said in a statement. That suggests Bank Indonesia intervened to help its currency hold onto gains after it jumped 9.1 percent in the week through Oct. 9.