Economist at UOB Group Enrico Tanuwidjaja and Yari Mayaseti review the latest FX reserves figures in Indonesia.
“Indonesia’s foreign exchange reserves surged by USD7.5bn to USD144.8bn, which Hit All-Time High in August from USD 137.3bn a month earlier. The latest reserve level was equivalent to finance 9.1 months of import or 8.7 months of imports and servicing the government’s external debt… 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 increase reserve assets in August were attributable to the additional allocation of Special Drawing Rights (SDR) equivalent to US$6.31bn, received from IMF. In 2021, IMF raised its SDR allotment and distributed proportionally to all of its members, including Indonesia, in order to support global economic resilience and stability affected by the pandemic. Going forward, we might see a moderate build-up in FX reserves underpinned by capital inflows, 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 developments and US Fed tapering among others, which may result in slower FX earnings and capital outflows.”