The rupiah weakened 1.2 percent so far this year. In 2012, Indonesia's currency lost 6.12 percent against the US dollar as market participants were concerned about the country's current account deficit that stood at USD $24.1 billion or 2.7 percent of GDP.

Indonesia's trade deficit has suffered, partly because of the country's high oil consumption (resulting in high oil imports), which is stimulated by huge fuel subsidies. The government intends to reduce these subsidies this June but it is a step which entails political risks as it triggers social unrest and higher inflation.

Last week, the Indonesian government announced its revised 2013 government budget, which includes an upward revision of the rupiah to IDR 9,600 from 9,300 to the US dollar.

| Source: Bank Indonesia

 

     2008    2009
   2010    2011    2012    2013²
Foreign Exchange
Reserves¹
   51.6    66.1    96.2   110.1   112.8   105.2

¹ in billion USD dollar
² at end May 2013
Source: Bank Indonesia

Bahas