Indonesia: Outlook for FX Reserves remains constructive – UOB

Pablo Piovano FXStreet

UOB Group’s Economist Enrico Tanuwidjaja and Haris Handy assessed the latest set of FX Reserves data in Indonesia.

Key Quotes

“Indonesia’s foreign exchange reserves stood at USD135.9bn as of end-December 2020, an increase from USD133.6bn in the previous month. The latest reserve level was equivalent to finance 10.2 months of imports or 9.8 months of imports and servicing government’s 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 increase of reserve assets in December 2020 was mainly attributable to government’s foreign loan withdrawal and tax receipts. 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 due to the vaccine as a game changer. 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.”

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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