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

Key Quotes

“Indonesia’s foreign exchange reserves increased by USD2.1bn to USD138.0bn in January 2021, an all-time high, surpassing the previous record of USD137.0bn in August last year. The latest reserve level was equivalent to 10.5 months of import financing or 10.0 months of imports and servicing government’s external debt. This is well above the international adequacy standard of around 3 months of imports. Bank Indonesia views that the official reserve assets position is able to support the external sector resilience and maintain macroeconomic and financial system stability.”

“The increase of reserve assets in January 2021 was mainly attributable to government’s global bonds issuance and tax receipts. Going forward, we might see a moderate build-up in FX reserves on the back of capital inflows, more proceeds from exports, as well as other FX earnings, as the global economy has slowly begun to recover with the vaccine as a game changer. Nevertheless, downside risks remain on the back of the ongoing uncertainty from COVID-19 development, which may result in capital outflows and slower FX earnings should domestic situation worsen.”