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Understanding foreign Exchange Reserves and the 5 Components

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Understanding foreign Exchange Reserves and the 5 Components

Devisa - The end of last week, for example, Bank Indonesia recorded the position of foreign exchange reserves in Indonesia at the end of August 2019 to reach US$ 126,4 billion.

Executive director of Communication Department BI Onny Widjanarko stated this increase is mainly affected by foreign exchange receipts from the oil and gas sector (oil and gas) and the receipt of foreign exchange aka forex.

The tool exchange this can be in the form of foreign exchange which is recognized by all other countries in the world, for example the United States Dollar and the Japanese Yen.

The growth of large-size foreign exchange reserves into a signal for the global financial market about the credibility of monetary policy and the creditworthiness or the creditworthiness of a country.

The weighing must be used every needed, foreign exchange reserves usually in the form of wealth in the form of foreign currency that is easily traded, gold, and short-term bills that are illiquid.

The IMF gave the criteria of liquid when the asset can be liquidated before the period of a year.

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