Thursday, 14 November 2019

Indef: Forex Reserves Down because of Trade War

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Petir Garda Bhwana

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  • TEMPO.CO, Jakarta - Indonesia's forex reserves at the end of September 2019 dropped by US$2.1 billion from August's US$126.4 billion. The Institute for Development of Economics and Finance or Indef said that one of the reasons for that decline is the uncertainties stemming from the US-China trade war.

    Indef economist Bhima Yudhistira Adinegara said the forex reserves decline was caused by external and internal factors.

    "Such as the external factor of uncertainties from the trade war between the United States and China. Then there is the issue of recession and geopolitical instability in Hong Kong, which affects investors' trust in emerging markets," he said on Monday, October 7.

    Bhima also said the government cannot solely rely on the issuance of state securities (SBN) to boost foreign exchange, as the decline in bond rates is also a contributing factor.

    Domestically, Bhima said, there has been no significant improvement in terms of trade balance performance due to low exports caused by stagnant prices of leading commodities such as rubber, palm oil and coal.

    "Meanwhile, import pressures may increase with the global oil price climb and [Indonesia's] preparation to stock up on fuel nearing the end of the year," he said.

    He predicted foreign exchange reserves will continue to be corrected until the year-end to a range of US$120 billion—US$123 billion.

    EKO WAHYUDI