BI's about-face on rupiah is challenged by lack of reserves

Jakarta

INDONESIA'S foreign-exchange reserves, the smallest in South-east Asia relative to economic output, are coming under scrutiny as the central bank starts to combat the rupiah's slide to a 16-year low.

"Indonesia is not in a comfortable range when it comes to reserves," Michael Every, head of financial markets research at Rabobank International in Hong Kong, said in a March 19 phone interview. "It makes more sense that they would like to build reserves and see the trade-weighted rupiah continue to weaken."