Economist at UOB Group Enrico Tanuwidjaja and Haris Handy assessed the latest foreign reserves results in Indonesia.
Key Quotes
“Indonesia’s foreign exchange increased by USD0.7bn to USD137.1bn in June. The latest reserve level was equivalent to finance 9.2 months of import or 8.8 months of imports and servicing the government’s external debt. This is still well above the international adequacy standard of around 3 months of imports. Bank Indonesia views that the official reserve assets remain adequate and is an important factor for the external resilience of the national economy.”
“The increase in reserve assets in June was attributable to the government’s Global Sukuk issuance as well as tax and services receipts. Entering 2H21, it might be challenging to keep up with the momentum of FX reserve build-up following COVID-19 resurgence in the Asia region (including Indonesia), which might hit some proceeds of exports and other FX earnings. In addition, the latest hawkish stance from the Fed, after June FOMC, might result in capital outflows to some degree. Nonetheless, there are still opportunities in the light of adjusted social restriction methods, vaccination rollout, and gradual global economic recovery, which may result in higher capital inflows and FX earnings.”
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