Indonesia: FX reserves receded in May – UOB

Pablo Piovano FXStreet

Economist at UOB Group Enrico Tanuwidjaja and Haris Handy assess the latest FX reserves figures in Indonesia.

Key Quotes

“Indonesia’s foreign exchange reserves fell by USD2.4bn to USD136.4bn in May. The latest reserve level was equivalent to finance 9.5 months of import or 9.1 months of imports and servicing 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, supported by the stability and solid domestic economic outlook, in line with the policy responses to stimulate economic recovery.”

“The decline of reserve assets in May was attributable to the government’s external debt payments. Going forward, we might see a moderate build-up in FX reserves especially in the 2H21 underpinned by capital inflows, more proceeds from exports, as well as other FX earnings, as the vaccination program continues and the global economy gradually recovers. Nevertheless, downside risks remain on the back of the ongoing uncertainty from COVID-19 development, US Treasury yield and inflation expectation, which may result in capital outflows and slower FX earnings.”

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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