Indonesia Macro Update - Trade Balance 22 Apr 2024
KBVS MACRO UPDATE
Monday, 22 April 2024
Mar ’24 Trade Surplus is Expected to Drive The Rupiah Appreciation
The decline in Mar ’24 FX reserves by USD3.65 bn, accompanied by a capital outflow of USD1.05 bn is being offseted by an increase in the trade surplus to USD4.47 bn (Cons: USD1.23 bn, KBVS: USD-0.14 bn, Prev: USD0.87 bn) in the same period. This was driven by the 16.40% MoM increase in exports (or -4.19% YoY), conversely, there was a decrease in imports by -2.60% MoM (or -12.76% YoY).
We anticipate that the surge in Mar ‘24 trade surplus will promptly uphold the stability of the Rupiah, supported by the resolution of the presidential election dispute, which has provided domestic political certainty. Consequently, we expect it to return below IDR15,600 per USD on average throughout 2Q24, although global geopolitical tensions also need to be monitored. We hope this can be realized alongside the improvement in the economy indicated by the Manufacturing PMI of Indonesia's main export partners, particularly China, the US, and India, which have consistently remained in an expansive level over the past three months to maintain the trade surplus above USD3 bn per month throughout 2Q24. Furthermore, we also anticipate that this will encourage the return of a current account surplus in the same period, after it last occurred in 1Q23.
Regards,
Fikri C Permana - KBVS Research Team