The Indonesian rupiah exchange rate had depreciated (0.15 percent) to IDR 11,665 per US dollar on Thursday (27/02), 15:00 local Jakarta time, based on the Bloomberg Dollar Index. Governor of Bank Indonesia Agus Martowardojo stated yesterday to expect the currency to stabilize near current levels in line with its economic fundamentals ahead of looming further Federal Reserve tapering. Analysts estimate that Indonesia's trade balance might deteriorate in January 2014 as the impact of the mineral-ore export ban kicks in.
In December 2013, Indonesia posted a USD $1.52 billion trade surplus particularly due to miners exporting as much raw material as possible before the implementation of the export ban on 12 January 2014. This helped to ease the country's current account deficit to 1.98 percent of GDP in the fourth quarter of 2013, a sigfinicant improvement from 4.4 percent of GDP in the second quarter of 2013. The record high current account deficit was one of the major concerns of international investors amid uncertainty about the Federal Reserve's tapering policy last year. Only in December 2013, the US central bank provided more clarity about the winding down of its quantitative easing program. Before that announcement, large capital outflows had been hurting emerging markets, including Indonesia, since the end of May 2013 when Ben Bernanke started speculating about an end of the program. Indonesia was one the hardest-hit emerging economies, mainly due to the record high current account deficit last year.
However, as December 2013 trade data are influenced by a surge of raw mineral exports (which cannot be continued into 2014 due to the ban), it thus provides a bit of a false picture about the true state of Indonesia's trade. Therefore, market participants are highly interested to know the January 2014 trade statistics. These will be released by Statistics Indonesia on 3 March 2014.
Bloomberg reported earlier today: "The yield on the government’s 8.375 percent bonds due March 2024 fell one basis point to 8.45 percent, the lowest level this week, according to the Inter Dealer Market Association."
Market participants are also waiting for several important US data before making large decisions. Today US initial jobless claims and US durable goods orders will be released. These data are important for the pace of Fed tapering.
Meanwhile, Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) depreciated 0.05 percent on Thursday (27/02) to IDR 11,675 per US dollar.