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Economist Enrico Tanuwidjaja and Haris Handy at UOB Group reviewed the latest results from Indonesian FX reserves.

Key Quotes

“Indonesia’s foreign exchange reserves increased by USD 1.9bn to USD 137bn in August 2020, a record high, surpassing the previous record of USD135.1bn in the previous month. The latest reserve level was equivalent to 9.4 months of import financing or 9.0 months of imports and payments of government external debt.”

“The increase in July’s foreign exchange reserves was driven by government’s foreign loan withdrawal as well as tax revenues, and oil & gas export proceeds. 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 March 2020 also reduce the need for BI to conduct market interventions. Nevertheless, the downside risks remain on the back of the ongoing uncertainty from COVID-19 development, which may result in capital outflows and slower FX earnings.”