The stability of the financial system remains normal in the context of the Russian-Ukrainian war

Jakarta (ANTARA) – The stability of the Indonesian financial system has remained normal despite external pressures resulting from the war between Ukraine and Russia.

“The stability of the Indonesian financial system is in a normal state amid increasing external pressure due to the war in Ukraine,” Chairman of the Committee for Financial System Stability (KSSK), Sri Mulyani, noted during a meeting. press conference in Jakarta on Wednesday.

The stability of the Indonesian financial system remaining normal is evident from the sustained economic recovery, notably supported by better management of COVID-19, noted the Minister of Finance.

The decline in the number of cases and the effective management of COVID-19 were followed by the easing of restrictions on community activities, which in turn boosted national economic activities.

Indonesia’s economic growth is also expected to remain strong, supported by government or household consumption and investment activities as well as supportive government spending.

Indicators of financial system stability were also reflected in export performance, which saw a significant increase.

Sri Mulyani suggested continuing to monitor an increase in exports depending on the development of world trade and global economic growth threatened by the war in Ukraine.

Several economic indicators through early March 2022 also performed well, such as the consumer confidence index, retail sales, motor vehicle sales growth, cement consumption, and electricity consumption.

Meanwhile, on the external side, the trade balance surplus in February 2022 increased to $3.83 trillion, supported by the non-oil and gas trade balance surplus, especially with rising prices. commodity markets of coal, iron, steel and CPO, among others.

On the other hand, with the growing uncertainty in global financial markets and the inflow of foreign capital into domestic financial markets, which are under pressure, portfolio investment recorded a net outflow of US$1.3 billion. as of March 31, 2022.

However, this net outflow pressure compared to other emerging markets, which also saw net outflows, was still relatively weaker or better.

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Indonesia’s foreign exchange reserves as of March 2022 are still at a high level, reaching $139.1 billion, which is equivalent to financing 7.2 months of imports or seven months of imports and financing external debt of the government.

This standard is higher than the international standard of suitability which is usually calculated at around three months of import requirements.

“Therefore, it is more than double the international standard for adequacy,” Sri Mulyani pointed out.

Additionally, the rupee exchange rate was held steady amid growing uncertainty in global financial markets, although in the first quarter of 2022 the rupee exchange rate experienced a slight depreciation of 0.33 % on average from the position at the end of 2021.

The depreciation of the rupiah was less than that of the currencies of several other developing countries, such as the Malaysian ringgit, 1.15% (ytd); the Indian rupee, 1.73% (ytd); and the Thai baht, 3.15% (ytd).

Finally, Indonesian inflation until March 2022 also remained under control at 2.64% (year-on-year), supported by supply still fairly under control in response to rising demand.

“Also controlled inflation expectations, stability of the rupiah exchange rate, as well as various government policy responses, especially keeping government-regulated goods,” she explained.

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Don F. Davis