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Enrico Tanuwidjaja, Economist and Haris Handy at UOB Group assessed the latest figures from the Indonesian foreign reserves.

Key Quotes

“Indonesia’s foreign exchange reserves increased by USD 3.4bn to USD 135.1bn in July 2020, the highest level ever, beating the previous record-high of USD 132bn in January 2018. The latest reserve level was equivalent to 9 months of import financing or 8.6 months of imports and payments of government external debt.”

“The increase in July’s foreign exchange reserves was driven by the global bond issuance and government’s foreign loan withdrawal. The government has raised 100 billion yen (US$930 million) from the issuance of five-tranche samurai bonds to help cover the fiscal deficit and fund the coronavirus pandemic response in early July. Going forward, we might see a further moderate build-up in FX reserves on the back of capital inflows, proceeds from exports, as well as other FX earnings. In addition, better market conditions from three months ago will also reduce the need for BI to conduct market interventions.”