Despite Slowing GDP Growth and Trade Deficit, Indonesian Rupiah Appreciates
Despite the release of slowing Q2-2014 GDP growth as well as the June 2014 trade deficit, the Indonesian rupiah exchange rate appreciated 0.53 percent to IDR 11,698 against the US dollar according to the Bloomberg Dollar Index on Tuesday (05/08). This performance of Indonesia’s currency is in line with the performance of other emerging Asian currencies on today’s trading day. The US dollar weakened against almost all these currencies as lower US yields made investors decide to search for higher returns in Asia.
The US dollar’s performance was capped by a decline in treasury yields after weaker-than-expected US non-farm payrolls data last week knocked it off the 103 threshold. US treasury yields fell as the bond market retained its bullish tone after rallying Friday (01/08) on the jobs report.
As such, the rupiah was not significantly impacted by domestic data. Today, Statistics Indonesia (BPS) announced that economic growth in Southeast Asia’s largest economy slowed to 5.12 percent. Yesterday, BPS released data that show a USD $300 million trade deficit in June 2014, thus placing more pressure on the country’s wide current account deficit. Inflation, however, improved markedly to 4.53 percent (year-on-year) in July 2014 (from 6.70 percent yoy in the previous month).
Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) appreciated 0.11 percent to IDR 11,733 per US dollar on Tuesday (05/08).