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

Key Quotes

“Indonesia’s foreign exchange reserves fell by USD 1.5bn to USD133.7bn in October 2020, from USD135.2bn in the previous month. The latest reserve level was equivalent to 9.7 months of import financing or 9.3 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 position was able to support the external sector resilience and maintain macroeconomic and financial system stability.”

“The decline in September’s foreign exchange reserves was driven by government’s foreign debt payment. 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.”