Indonesia: FX Reserves shrunk in September – UOB

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

Key Quotes

“Indonesia’s foreign exchange reserves fell by USD 1.8bn to USD135.2bn in September 2020, from a record-high of USD137bn in the previous month. The latest reserve level was equivalent to 9.5 months of import financing or 9.1 months of imports and payments of government external debt.”

“The decline in September’s foreign exchange reserves was driven by government's foreign debt payment as well as efforts to stabilize the rupiah exchange rate amidst persistently high global financial uncertainty. 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, especially on the later stage after 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.”