Independent Economist Calls Indonesian Foreign Exchange Reserves Stable Because Of This

Illustration. (Photo: Doc. Antara)

JAKARTA - Bank Mandiri economist Faisal Rachman said the stable condition of Indonesia's foreign exchange reserves in August 2022 was caused by the external sector which was still strong in reducing global uncertainty. Indonesia's foreign exchange reserves at the end of August 2022 were recorded at US$132.2 billion or did not change compared to the July 2022 period which was also US$132.2 billion. Faisal in his official statement projects that foreign exchange reserves will reach the range of US$ 130 to 140 billion by the end of 2022, or decreased from the previous US$144.9 billion in 2021. The projection is based on estimates related to the surplus of goods in the current account balance which will be narrowed in the future. He estimates that imports will be able to offset exports in line with the acceleration of national economic recovery. He continued that the upward trend in most commodity prices also began to subside amid fears of a global recession that could weaken global demand. Thus, this could risk weakening export performance in the second semester of 2022. "We see that the balance of transactions running in 2022 still has the potential to record a small surplus of 0.03 percent from GDP, maintaining foreign exchange reserves and stability in the rupiah exchange rate," said Faisal, quoted from Antara. In addition, according to him, the efforts of the government and Bank Indonesia (BI) in reimposing sanctions for exporters who do not place domestic Export Results Foreign Exchange (DHE) will further support this stability. On the other hand, Faisal said the balance sheet would face several reduced risks which might close the entry of capital flows in the second semester of this year. According to him, this is due to more hawkish and fast global monetary normalization that triggers quality sentiment or capital outflows in emerging markets, including Indonesia. Based on Bank Indonesia records, the position of Indonesia's foreign exchange reserves in August 2022 is equivalent to financing 6.1 months of imports or 6.0 months of imports and payment of government foreign debt. The position of this reserve is far above the international adequacy standard of 3 months of imports.