Foreign Reserves in Indonesia expected to keep growing – UOB

Economist E.Tanuwidjaja at UOB Group reviewed the recent performance of FX Reserves in Indonesia.

Key Quotes

“Indonesia’s October foreign exchange reserves surged by USD2.4bn to USD126.7bn from USD124.3bn in the previous month. The latest reserve level was equivalent to 7.4 months of import financing or 7.1 months of imports, and payments of government external debt; which is well above the international adequacy standard of around 3 months of imports. The increase in October’s foreign exchange reserves was driven by the government’s global bond issuance, as well as oil & gas and other foreign exchange receipts. Bank Indonesia (BI) assessed that foreign exchange reserves will remain adequate, supported by the foreign exchange stability and solid domestic economy prospect”.

“Even though export outlook is still rather dim this year, we might see a further moderate build-up in FX reserves in light of the “phase one” US-China trade deal and the return of investor confidence following President Joko Widodo’s inauguration and 2019–2024 cabinet announcement, which may result in higher capital inflow. Indonesia’s stable and low inflation is also another key factor as it helps the central bank in maintaining the exchange rate stability”.