TEMPO.CO, Jakarta - Fitch Ratings, a credit rating agency, highlights the risk of declining investor confidence and foreign exchange in Indonesia. According to Fitch, a sharp and sustained decline in foreign reserves could add pressure on Indonesia's credit rating.
Fitch projects that Indonesia's foreign reserves will be sufficient to cover 4.9 months of external payments in 2026. This position is slightly below the median for "BBB" rated countries, which is 5.0 months. As of the end of May, Indonesia's foreign reserves stood at US$144.9 billion, equivalent to 5.6 months of import financing.
In its analysis, Fitch stated that foreign exchange interventions by Bank Indonesia have reduced foreign reserves and absorbed rupiah liquidity, tightening domestic funding conditions. This contributed to a gradual increase in the short net foreign currency position, reaching nearly US$27 billion at the end of May. Fitch mentioned that the need for foreign exchange could increase in the future.
"A sustained and sharp decline in FX reserves, particularly if driven by persistent capital outflows linked to weaker investor confidence or further weakening in governance indicators, could add pressure on the sovereign rating," Fitch wrote in its analysis, quoted on Saturday, July 4, 2026.
Fitch also highlights the government's policy of centralizing exports through PT Danantara Sumberdaya Indonesia (DSI). According to Fitch, the risk of executing the export of strategic commodities through DSI is very high due to the policy's limited operational details. Policy uncertainty is a major obstacle to investor confidence in Indonesia.
"Greater state intervention in commodity exports could undermine investor sentiment and weigh on Indonesia’s medium-term growth prospects if it significantly deters FDI inflows, while tighter scrutiny of the country’s natural resource sector could also disrupt commodity export flows," Fitch stated.
However, Fitch noted that effectively implementing and supporting exports through DSI with strong governance could gradually strengthen government revenue from strategic commodity sectors and support the accumulation of foreign reserves.
Read: What's Next for Indonesia's Financial Markets in H2 2026?
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