The Indonesian rupiah is not having a good day as it was down 1.05 percent to IDR 13,659 per US dollar by 10:45 am local Jakarta time (Bloomberg Dollar Index) on Tuesday (20/10), weakening the most in a week. In line with most other emerging market currencies in Asia, the rupiah is falling presumably on concern about weak economic growth in China. Yesterday, Chinese authorities announced the world's second-largest economy expanded 6.9 percent (y/y) in Q3-2015. This result is slightly better than estimates but does also constitute a six-year low, hence negatively affected exports of its trading partners.
Regarding Indonesian exports, China is the main export destination. Declining Chinese demand has been a major cause for Indonesia's weak export performance, especially as prices of various commodities have plunged severely. Indonesia is a leading exporter of crude palm oil, coal and metals.
Although Indonesia posted a USD $1.02 billion trade surplus in September 2015, the country's tenth consecutive monthly trade surplus, concerns persist as the trade surplus is primarily caused by rapidly declining imports, reflecting weak investment growth and weak consumption in Southeast Asia's largest economy. Meanwhile, Indonesia's exports fell 18 percent (y/y) to USD $12.5 billion in September 2015 on weak global economic conditions.
Moreover, China's September industrial output growth failed to beat analysts' estimates, leading to the further decline of the Bloomberg Commodity Index.
Bloomberg Commodity Index:
Furthermore, a statement from Federal Reserve Bank of San Francisco President John Williams made global investors nervous as he said the Federal Reserve could raise its key Fed Fund Rate in the near future on current stable prices and maximum employment in the USA. Markets are also awaiting a speech by US Federal Reserve Chairwoman Janet Yellen scheduled later today.
Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) depreciated 0.52 percent to IDR 13,634 per US dollar on Tuesday (20/10).
Indonesian Rupiah versus US Dollar (JISDOR):| Source: Bank Indonesia