Foreign reserves stood at $131.7 billion in January, which was the second-highest level in Indonesia's history after the $131.9 billion booked in January 2018.

February’s figure is enough to support 7.4 months of imports and payments of the government’s short-term debts and is above the international adequacy standards of about three months of imports.

“Bank Indonesia considers this enough to support external sector resilience and maintain macroeconomic and financial system stability,” the central bank wrote in a statement.

“Going forward, we see the reserves as adequate, supported by a stable and solid domestic economic outlook.”

However, risks loom as the country is expected to face heavy foreign outflows in the future, said Bank Mandiri economist Andry Asmoro.

Foreign investors sold a net Rp 30.8 trillion (US$2.17 billion) of Indonesian assets through February until Feb. 27, Rp 26.2 trillion of which was in government bonds and Rp 4.1 trillion in stocks.

"Risks are coming from weaker global growth," Andry said. "Stagnated commodity prices and escalating fears over the COVID-19 outbreak will disrupt Indonesia’s exports and tourism and cause higher uncertainty and volatility in the financial market."

The pneumonia-like illness, which was first reported in Wuhan, China, at the end of December 2019, has infected around 95,000 people worldwide and killed more than 3,200, disrupting businesses, factories, schools and office activities around the globe as governments try to contain the virus.

President Joko “Jokowi” Widodo announced on Monday the first two confirmed COVID-19 cases in Indonesia, prompting concerted efforts by the government and financial authorities to cushion the country’s economy from a possible hit.

However, Andry expressed his optimism that the United States Federal Reserve's dovish monetary stance coupled with Indonesia’s benign inflation rate in 2020 would make returns of Indonesia’s financial assets remain relatively attractive, encouraging foreign investors to pour their money into the country’s financial system.

“We estimate the CAD [current account deficit] in 2020 to widen to 2.88 percent of GDP versus 2.72 percent of GDP in 2019 and the rupiah exchange rate to depreciate to 14,296 per US dollar versus1 3,866 in 2019,” he said.

The Fed delivered an emergency half-percentage point interest rate cut to a range of 1 percent and 1.25 percent on Tuesday in a bid to protect the US economy from the spreading coronavirus. BI also cut its benchmark interest rate, the seven-day reverse repo rate, by 25 basis points (bps) to 4.75 percent last month to mitigate the potential risks from a COVID-19 spread on the country’s economic growth.

BI Governor Perry Warjiyo said on Wednesday that the central bank saw ample room for monetary and macroprudential easing amid risks posed by the outbreak.

He cited room for a lower reserve requirement ratio for both the greenback and rupiah for local banks. He also mentioned the policy rate as a possible easing measure to jack up growth, which he expected to slow down to 4.9 percent in the first quarter, compared with a three-year low of 4.97 percent in the 2019’s fourth quarter.

“Going forward, the direction of BI’s monetary stance will continue to be accommodative,” Perry stressed.

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