MONETARY POLICY - JAKARTA. There is a chance that foreign exchange reserves will increase by the end of 2024 compared to the level at the end of 2023, which was US$ 146.4 billion.
UOB Bank Economist Enrico Tanuwidjaja calculates that Indonesia's foreign exchange reserves this year will be in the range of US$ 145 billion to US$ 155 billion.
He revealed that this is driven by the potential strengthening of demand from Indonesia's main trading partner countries, which boosts exports.
In addition, there are sweet prospects from the movement of Indonesia's main export commodity prices, namely crude palm oil (CPO).
“The prospect of CPO prices is promising this year,” explained Enrico in the Foreign Exchange Reserves report from UOB Bank's Macro Outlook February 2024 edition.
In addition to strengthening export performance, Enrico also sees the impact of political stability after the election and the continuation of infrastructure development programs and the government's hilriisation will encourage foreign direct investment (FDI).
This is also actually in line with the government's investment growth target of 18% yoy in 2024.
However, Enrico warns that there are still things to be wary of. This is considering that the business world still has the possibility to hold back expansion plans at least until August 2024.
“The business world is still holding back expansion plans, at least after the results of the 2024 Election are published in August,” added Enrico.
In addition, the weakening prospects for China's economic growth this year will limit the demand for commodities from Indonesia, especially iron and steel.