Indonesia's foreign currency reserves have doubled in size in the eight years since the global financial crisis roiled its markets but an examination by Reuters of its reserve assets shows a thinner buffer than officially reported data on gross reserves suggests.
More than a quarter of Bank Indonesia's (BI) reserves include borrowings from banks and market participants, a much higher proportion than those of other Asian central banks.
Some analysts say that as borrowings, they are actually short-term liabilities rather than reserve assets, and so cannot be used for market intervention. These analysts say this constrains the central bank's ability to defend its currency.
BI rejects this argument and stresses that its markets are safe. The International Monetary Fund (IMF) told Reuters it is unable to make a conclusive call one way or the other because details of capital inflows, which could offset these borrowings, were unknown.
Official central bank data shows gross reserves amounted to $101.7 billion at the end of September, double the levels during the 2008 global financial crisis and several times its meagre reserves in 1998. Reserves dropped slightly to $100.7 billion in October.
The IMF's breakdown, available only for September, shows $28.7 billion of that is made up of foreign currency loans, deposits and the central bank's operations in currency swaps, or what the IMF terms "pre-determined short-term net drains" on reserves.
That effectively leaves Indonesia's central bank with about $73 billion of net or useable reserves in a worst-case-scenario in which foreign lenders and investors lose faith and flee rupiah assets. That amount just meets the traditional criterion for reserves adequacy of six months' worth of imports.
"Technically these items should be included in the FX reserves," said Sanjay Mathur, RBS's head of Asian economic research and strategy, referring to the bank deposits and loans included in the BI's reserves. "But they are not a part of the useable, unencumbered reserves. It's a technical distinction."
In terms of such "useable" reserves, Indonesia's are the lowest among its Asian peers.
Malaysia, whose currency is Asia's biggest underperformer this year, had gross reserves of $93.3 billion at the end of September and net reserves of $85 billion. South Korea's central bank has $51 billion of forward net sold dollar positions, which means its useable reserves are that much higher than the gross total $368 billion.
"It's somewhat of a concern in as far as it shows that the Indonesia's reserve adequacy is lower in net terms," said Claudio Piron, co-head of currency and rates strategy at Bank of America Merrill Lynch.
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