Economist: Weakening Potential Foreign Exchange Reserves Lasts Until Second Quarter 2024 Due To Global Uncertainty

Illustration. (Photo: Doc. Antara)

JAKARTA - Economist Josua Pardede said the weakening of Indonesia's foreign exchange reserves has the potential to last until the second quarter of 2024 due to high global uncertainty and the need for imports in controlling domestic inflation.

"We see that the decline in foreign exchange reserves can last until the end of the second quarter of 2024 because apart from the high global uncertainty, especially regarding the US economy and the direction of the Fed interest rate, there is a need for dividend and coupled payments to non-residents," said Josua, quoted from Antara, Wednesday, April 17.

The head of Bank Permata economist said that the decline in foreign exchange reserves also has the potential to occur because there is a need for principal payment of foreign debt (ULN).

In addition, uncertainty related to the new government will also gradually decline so that it can trigger foreign investment directly into the country.

The opening of a global interest rate cut space that has an impact on the weakening of the US dollar will have a positive impact on commodity prices so that it can support export performance.

By the end of the year, Josua predicted Indonesia's foreign exchange reserves to be in the range of 150 billion US dollars to 152 billion US dollars.

At the end of March 2024, Indonesia's foreign exchange reserves remained high at USD 140.4 billion, although it decreased compared to the position at the end of February 2024 of USD 144.0 billion.

He estimates that there will still be a risk of weakening the rupiah exchange rate in the short term. However, he believes Bank Indonesia (BI) will be present in the market to intervene in the foreign exchange market (Valas) in spot transactions, Domestic Non-Develoable Forward (DNDF), and Government Securities (SBN) in the secondary market.

BI will also strengthen its pro-market monetary operations strategy for the effectiveness of monetary policy, including optimizing the Rupiah Securities of Bank Indonesia (SRBI), Bank Indonesia Securities (SVBI), and Bank Indonesia's Sukuk Valas (SUVBI).

Until March 19, 2024, the BI Rupiah Securities (SRBI) auction reached IDR 409.38 trillion to support the deepening of the money market and foreign capital flows into the country.

In the same period, the position of the BI Valas Securities (SVBI), and the BI Valas Sukuk (SUVBI) were recorded at US$2.31 billion, and US$ 387 million, respectively.