JAKARTA - Bank Indonesia recorded that Indonesia's International Investment Position (IIP) experienced a drop in terms of net liabilities in the third quarter of 2019, which was mainly affected by lower international financial liabilities.
Indonesia's PII posted US$ 326.2 billion in net liabilities or 29.8% of the country's GDP in Q3, down from US$ 329.6 billion or 30.9% of the GDP in Q2. The drop was driven by lower international financial liabilities and the increase of international financial assets.
"The drop in Indonesia's international financial assets was mainly influenced by other changing factors, such as the strengthening of the US dollar exchange rate against the rupiah and the lower value of rupiah-denominated investment instruments in line with the weakening of the Jakarta Composite Index (JCI)," BI wrote in an official statement received by IDNFinancials.com, Friday (27/12).
Indonesia's international financial liabilities in Q3 fell 0.3% quarter to quarter (qtq) or by US$ 1.9 billion to US$ 691.4 billion. Further decline was contained by the increase of foreign capital inflow in the forms of equity, corporate global bonds, and rupiah-denominated State Securities.
Meanwhile, Indonesia's international financial assets increased with support from assets in the forms of other investments and foreign exchange reserves. In Q3, the country's international financial assets grew 0.4% qtq or by US$ 1.5 billion to US$ 365.3 billion.
"Further increase of [Indonesia's] international financial assets was contained by the strengthening of the US dollar exchange rate against other global currencies and the average decline of stock indices in countries of investment," BI wrote.
BI views that Indonesia's IIP development in Q3 remained healthy as reflected by the structure of Indonesia's net liabilities, which was dominated by long-term instruments. Nevertheless, the central bank remains cautious of the risk of Indonesia's IIP net liabilities against the economy.
"Going forward, Bank Indonesia is convinced that Indonesia's IIP performance will improve in line with well-maintained economic stability and the country's continuing economic recovery as supported by the consistency and synergy of Bank Indoensia's policy mix, fiscal policy, and structural reform," BI concluded. (MS)