JAKARTA. Asia Development Bank Institute (ADBI) economist Eric Sugandi predicts that forex reserves in March 2019 will rise by US$ 2 billion to US$ 125 billion, up 1.62% from US$ 123.3 billion in February 2019.
According to Mr Sugandi, the increase will be boosted by foreign capital inflows through state securities and stocks reached Rp 90 trillion. Amid foreign capital inflows, Bank Indonesia (BI) also refrained from market intervention.
"The rupiah was relatively stable in March, so the use of forex reserves for market intervention was relatively insignificant," Mr Sugandi told Kontan.co.id, Friday (29/3).
However, Mr Sugandi added that the possibility of a recession needs to be monitored because it would affect Indonesia's forex reserve position. "It would affect forex reserves if our exports were negatively impacted overall," he said.
If the trade balance scored a deficit, forex from international trade was reduced. If a recession occurred in the US, forex reserves could be affected through international financial lines, with global investors reducing their ownerships of portfolio assets in emerging markets such as Indonesia and foreign direct investment in Indonesia slowing down.
Signs of a recession in the US include the yield of treasury bonds with a three-month tenor that is higher compared to the 10-year tenor. The yield of three-month tenor treasury bonds was recorded at 2.46% (up frm 1.73% last year), while the 10-year tenor has a yield of 2.43% (dodwn from 3.20% last year), much like prior to the 2006-2007 recession. (AM/MS)