Foreign Exchange Reserves Increase In July 2024 Driven By Government Global Sukuk Issuance

US dollar (Photo: dock unsplash)

JAKARTA - Head of Bank Permata economist Josua Pardede said foreign exchange reserves experienced a significant increase in July 2024 to US$145.4 billion amid improving global sentiment.

"Indonesia's foreign exchange reserves as of the end of July 2024 reached 145.4 billion US dollars, an increase from USD 140.2 billion in June 2024. This increase in cadev is related to the issuance of global sukuk by the government, in addition to revenue from taxes and services," he said in his statement, Wednesday, August 7.

Josua said that in general, foreign capital flows in the domestic financial market tended to increase where foreign investor ownership in SBN increased by 305.29 million US dollars and foreign investors posted net buys of 411.33 million US dollars in the stock market. So the combination of foreign capital flows in the stock market and bonds was recorded at 716.62 million US dollars.

Josua explained that this incoming capital flow was supported by US inflation and labor market data indicating a slowdown in the US economy, which further increased expectations of the Fed's more dovish and thereby increased risk-on sentiment in the global financial market.

In addition, Josua conveyed that the SRBI recorded an entry flow of USD1.71 billion as of July 15, 2024. The success of the issuance of global sukuk by the government contributed around USD 2.35 billion to the flow of foreign capital entering.

"We also estimate that the trade balance for July 2024 will continue to show a surplus," he said.

According to Josua, Indonesia's foreign exchange reserves are sufficient to finance 6.5 months of imports, or 6.3 months of payment of government foreign debt. This level significantly exceeds the standard of adequate international foreign exchange reserves of around 3 months of imports.