RI's Forex Reserves Shrink To US$105 Bln

Jakarta, June 7 (Antara) - Indonesia`s foreign exchange reserve fell to US$105 billion by the end of May from 107.26 billion a month earlier. The decline was partly attributable to foreign monetary policies such as those of the United States and Japan, Bank Indonesia (BI) Governor Agus Martowardojo said here on Friday. "We follow the prevailing trend in the world. There is speculation about US quantitative easing and widening trade deficit and that Japan is about to issue new stimulus. All those issues have their impact on other countries including Indonesia," Agus said. The impact on Indonesia is falling value of rupiah that forces Bank Indonesia to intervene by buying more dollar cutting its foreign exchange reserves. The country`s foreign exchange reserves have been on the decline so far this year from US$112 billion at the start of the year shrinking to US$105 billion by the end of May. Agus, however, said described the flows of foreign exchange funds as normal on strong exports and banking industry . "We have strong exporters and banks. And BI will continue to observe the market. If necessary BI will maintain the confidence of the market," he said. He added, however, that the central bank wanted the process of supply and demand to dictate the market to guarantee that the market remains healthy.