Indonesia's Foreign Reserves Projected to Decline in October 2025

Economic Factors Behind the Decline

Bank Syariah Indonesia's Chief Economist, Banjaran Surya Indrastomo, has forecasted that Indonesia's foreign reserves will decrease by US$1.2-1.5 billion by the end of October 2025. This projection brings the total reserves down from US$148.7 billion in September 2025 to below US$147 billion. The primary driver behind this decline is the ongoing capital outflow, particularly evident in the state securities market where a significant Rp33.86 trillion outflow was recorded.

Market Impact and Currency Considerations

The substantial withdrawal from the state securities market has raised concerns about currency stability and overall market sentiment. Foreign investors' continued withdrawal of funds from Indonesia's SBN market indicates a potential shift in investment preferences or risk appetite. This capital movement could lead to increased currency volatility and affect the overall economic outlook for the coming months.

Economic Context and Future Projections

The decline in foreign reserves is a critical indicator of Indonesia's economic health and external stability. While the current level remains relatively comfortable, further sustained outflows could pressure the Indonesian Rupiah (IDR) and impact the country's ability to maintain currency stability. Bank Indonesia, as the central bank, is likely to closely monitor these developments and may need to intervene if the trend continues.