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Asian Currencies Fall, Rupiah Becomes the Worst?

Jakarta, CNBC IndonesiaThe rupiah weakened against the United States (US) dollar on Monday (18/4/2022). All Asian currencies fell against the US dollar today, but the rupiah’s weakness was one of the least. China’s higher-than-expected economic growth was enough to lift the sentiment of market players, while the domestic trade balance continued a positive trend.

According to Refinitiv data, the rupiah opened trading by weakening 0.12% to Rp 14,360/US$. After that, the rupiah continued to weaken until it was almost stagnant at Rp. 14,345/US$. At the close of trading, the rupiah was at Rp 14,353/US$, down 0.07% on the spot market.

Compared to other Asian currencies, the weakening of the rupiah was the third smallest. Only lost to the Chinese yuan and the weaker Indian rupee.

The following is the movement of the US dollar against major Asian currencies up to 16:07 WIB.

The Chinese government today released economic growth data showing a significant slowdown. Gross domestic product (GDP) in the first quarter of 2022 is reported to have grown by 4.8%. The increase was higher than market participants’ expectations of 4.4%.

This higher-than-expected growth made market participants relieved that China was still able to maintain its economic recovery momentum despite re-implementing the lockdown in some areas.

China is Indonesia’s main export market. Of course, the expansion of the economy can maintain and increase demand for Indonesian commodities.
The demand for these commodities has made Indonesia’s trade balance continue to print a surplus.

The Central Statistics Agency (BPS) reported that the value of Indonesia’s imports last month was US$ 21.97 billion. Grow 32.02% compared to February 2022 (month-to-month/mtm) and 30.85% compared to March 2021 (year-on-year/yoy).

Previously, BPS revealed that the export value in March 2022 was US$ 26.5 billion. Thus, Indonesia’s trade balance posted a surplus of US$ 4.53 billion.

This surplus is the third largest in the history of independent Indonesia. Only lost to October 2021 (US$ 5.74 billion) and August 2021 (US$ 4.75 billion).

Indonesia has recorded a trade balance surplus since April 2020, or for the last 23 months. This is the first time this has happened in the era of President Joko Widodo (Jokowi) administration.

The last record of a continuous trade surplus was in August 2008-June 2010 which also lasted for 23 months. At that time, Indonesia was still led by President Susilo Bambang Yudhoyono (SBY).

The trade balance that continues to experience a surplus helps the current account (current account) Indonesia is able to record a surplus in 2021.

The current account surplus is the key to the stability of the rupiah, it can even strengthen because it reflects long-lasting foreign exchange flows in the country, unlike capital and financial transactions that come and go easily.

For now, capital and financial transactions are still performing well, especially in the stock market. Market data showed that over the past week, foreign investors made a net purchase of around Rp. 5.3 trillion, and so far this year, more than Rp. 41 trillion.

However, the good news from outside and within the country is still not able to encourage the strengthening of the rupiah. The US dollar is still strong, the index continues to climb until this afternoon it rose again 0.4% to 100.727 which is the highest level in the last two years.

The US dollar is still supported by expectations that the US central bank (The Fed) will raise interest rates 50 basis points in May and June.

CNBC INDONESIA RESEARCH TEAM

[Gambas:Video CNBC]

(pap/pap)


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