By Novrida Manurung
January 02, 2014 3:05 AM EST
posted its biggest trade surplus in 20 months in November, easing
pressure on the central bank to raise interest rates further to narrow a
current-account gap and support the currency. The rupiah erased losses.
trade surplus grew to $777 million in November, from a revised $24
million in October, the statistics office said today. That exceeded the
median estimate of $75 million in a Bloomberg News survey of 13
economists. Inflation was little changed in December at 8.38 percent,
the statistics office said, compared with a median forecast for 8.33
Record trade and current-account deficits last year led
Bank Indonesia to raise its benchmark by 1.75 percentage points since
early June. The country’s most aggressive rate tightening in eight years
has slowed the economy and reduced imports even as it failed to shore
up a currency that became Asia’s worst performer in 2013.
impact of BI’s tightening has started to kick in,” said David Sumual,
chief economist at PT Bank Central Asia in Jakarta. “Imports of raw
materials dropped significantly in November, probably due to the
anticipation of slower growth ahead.”
The spot rupiah rose 0.1
percent to 12,155 per dollar as of 2:40 p.m. local time, after declining
as much as 0.7 percent earlier today, according to local prices
compiled by Bloomberg. The currency lost 21 percent in 2013. Rupiah
one-month non-deliverable forward prices extended gains to 1.4 percent
The trade balance improved as
imports fell 10.6 percent in November from a year earlier, more than the
median estimate for a 7.6 percent drop. That was a result of monetary
policy tightening, and government curbs on imports of some commodities,
Suryamin, chairman of the statistics office, told reporters today.
improvement in the trade balance is likely sustainable in 2014,”
Australia & New Zealand Banking Group Ltd. economists Devika
Mehndiratta and Glenn Maguire wrote in a report today. “The improvement
in trade balance, coupled with our expectation for inflation to head
lower, tells us that BI is likely to stay on hold for the next couple of
Policy makers next meet to decide on rates on Jan. 9
after keeping the benchmark last month at the highest level in more than
four years, pausing to gauge the impact of recent policy tightening.
Indonesia’s current-account gap narrowed to 3.8 percent of gross
domestic product in the three months through September, after reaching a
record 4.4 percent in the second quarter.
data suggests the current-account deficit may have narrowed to about
2.6 percent of GDP or less in the fourth quarter, a “more comfortable
magnitude” that would help reduce pressure on the rupiah, said Chua Hak
Bin, an economist at Bank of America Corp. in Singapore. Inflation will
continue to ease and be at about 5.3 percent by end-2014, a level within
Bank Indonesia’s target range, he said.
Pressure on the
declining rupiah is likely to persist later this month through the first
half of 2014 toward 12,500 per dollar, said Dariusz Kowalczyk, a
strategist at Credit Agricole CIB in Hong Kong. He cited raw commodity
export curbs that take effect this month and uncertainty over the
outcome of presidential elections set for July.
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