Enrico Tanuwidjaja and Haris Handy, economists of the UOB Group, analyzed Indonesia’s latest foreign reserve figures.
“In June, Indonesia’s foreign exchange rose by USD0.7 billion to USD137.1 billion. The most recent reserve level was enough to fund 9.2 months’ worth of imports or 8.8 months’ worth of imports, as well as servicing the government’s external debt. This is still significantly higher than the international sufficiency criterion of three months’ worth of imports. The official reserve assets, according to Bank Indonesia, remain adequate and are an essential factor in the national economy’s external resilience.”
“The government’s Global Sukuk issue, as well as tax and service receipts, contributed to the increase in reserve assets in June. Following COVID-19’s revival in Asia (particularly Indonesia), it may be difficult to keep up with the momentum of FX reserve build-up in 2H21, which could hurt certain export receipts and other FX earnings. Furthermore, the Fed’s most recent hawkish posture, following the June FOMC, may result in some capital outflows. Nonetheless, with altered social restriction techniques, vaccination rollout, and a slow global economic recovery, there are still chances for larger capital inflows and FX earnings.”/n
