Rupiah pressured as Indonesian trade surplus rebounds

The USD/IDR exchange rate was unchanged on Wednesday morning after the relatively disappointing Indonesian trade numbers. The USD to rupiah pair was trading at 15,370, which was a few points below this week’s high of 15,474. 

Indonesia’s trade surplus widens

The most important catalyst for the USD/IDR price was the latest US inflation numbers, which we wrote about here. According to the Labor Department, consumer inflation remained stubbornly high in February. The closely-watched core CPI rose from 0.4% in January to 0.5% in February. Headline inflation remained stuck at 6%.

Therefore, these numbers have an implication on the next actions by the Federal Reserve. Economists now expect that the Fed will try to balance its inflation battle with the health of the financial sector. This could see the bank hike rates by 0.25%, lower than the 0.50% that Jerome Powell guided last week. The fear is that a dovish tone will lead to more inflation considering that the jobless rate stands at 3.6%.

The other important rupiah news was the latest Indonesian trade numbers. According to Statistics Indonesia, the country’s export growth continued slowing in February. It came in at 4.51%, lower than the previous month’s increase of 16.37%. The growth rate has been dropping after it peaked at 64% in September 2021.

On the other side of the spectrum, import growth continued to decelerate. The figure came in at -4.32%, which was lower than the expected 9.74%. It has been in the red in three of the last four months. As a result, Indonesia’s trade surplus widened to $5.48 billion, higher than the expected $3.27 billion. Indonesia has been recording strong surpluses since 2020.

USD/IDR technical analysis

USD/IDR chart by TradingView

The daily chart shows that the USD/IDR exchange rate has been in a bullish trend in the past few weeks. It has managed to rise from a low of 14,840 to a high of 15,467. This price is above the key level at 15,373, the lowest point on December 6. The 25-day and 50-day exponential moving averages (EMA) have made a bullish crossover.

Therefore, the pair will likely continue rising as buyers target the year-to-date high of 15,751. The stop-loss of this trade will be at the intersection of the EMA cross at 15,263.