According to Bank Indonesia (BI) governor Agus Martowardojo, forex reserves shrunk to $105.9 billion after the central bank used some of the funds to intervene in the currency market in an effort to prop up the ailing rupiah. The government also disbursed some of the funds to pay external debts.

"We are grateful that our foreign exchange reserves are now $105 billion, compared to $111 billion last year. It is an ample amount to finance external debt or obligation payments and to pay for imports," he told reporters in Jakarta on Friday.

The rupiah's stability, Agus added, had become a central bank priority and would be maintained in 2016. "We feel that foreign reserves are another instrument that we must manage, in addition to exchange rates and interest rates," he said

Eoin Treacy's view

Indonesia’s President Widodo has made some legislative and regulatory progress in reforming the economy and clamping down on corruption which has been largely ignored because of the fall in commodity prices and the influence of a weakening Chinese economy. As a major oil producer Indonesia has not been immune to the energy markets and the Rupiah accelerated to a low near
IDR15,000 against the US Dollar last September. Intervention by the central bank to stem the decline saw it jump by 10% in the space of a month and it has been notably steady of late; particularly in an environment where currency volatility has been making headlines. 

The Jakarta Composite Index has unwound its oversold condition relative to the 200-day MA but will need to sustain a move above it to confirm a return to demand dominance beyond short-term steadying. 

The US listed Market Vectors Indonesia ETF and the UK listed db-trackers MSCI Indonesia ETF shares similar patterns.