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

Key Quotes

“Indonesia’s November foreign exchange reserves stood at USD133.6bn, relatively unchanged from USD133.7bn in the previous month. The latest reserve level was equivalent to 9.9 months of import financing or 9.5 months of imports and payments of government external debt. This is 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 development of reserve assets in November 2020 was mainly attributable to government’s external debt withdrawal, taxes and oil & gas foreign exchange receipts, and government’s external debt payments. Going forward, we might see a moderate build-up in FX reserves on the back of capital inflows, proceeds from exports, as well as other FX earnings, as global uncertainty slowly dissipate. 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.”