Chunky trade deficit in April exerts pressure on rupiah

Jakarta (ANTARA) – The rupiah faltered against the US dollar in the Jakarta interbank spot market on Wednesday evening after being hit hard by the April trade deficit of US$2.5 billion.

The Indonesian currency plunged 29 points, or 0.2 percent, to Rp14,463 per US dollar on Wednesday evening, from Rp14,430 per dollar earlier.

President Director of PT Garuda Berjangka Ibrahim Assuaibi noted on Wednesday that the trade deficit posted in April 2019 had put an end to the positive trend of trade balance in the past couple of months.

Indonesia’s trade surplus reached $540 million in March and $330 million in February.

“When the trade balance records a deficit, it will become increasingly challenging to stem the current account deficit,” he pointed out.

The Central Statistics Agency (BPS) stated earlier in the day that Indonesia had posted a trade deficit of $2.5 billion in April 2019, comprising $1.49 billion from the oil and gas sector and $1.01 billion from the non-oil/non-gas sector.

Indonesia’s April exports shrunk 10.80 percent to $12.6 billion, from $14.12 billion in March, BPS Chief Suharyanto remarked.

“As compared to April 2018, exports noticeably decreased by 13.10 percent, from $14.5 billion,” he stated.

In the meantime, Indonesia’s imports rose 12.25 percent to touch $15.10 billion in April 2019, in comparison with $13.45 billion a month earlier.

Oil and gas imports increased 46.99 percent, whereas non-oil/non-gas imports rose 7.82 percent.

Cumulatively, Indonesia’s trade balance during the January-April 2019 period posted a deficit of $2.56 billion, with oil and gas trade recording a $2.7 billion deficit and non-oil/non-gas trade booking a $204.7 million surplus.

The April 2019 figure is the widest monthly trade deficit in history since $2.3 billion in July 2013.

On the external front, the dollar strengthened in line with the positive development in the US-China trade war and made it attractive to investors. President Donald Trump appears to have softened his tough stance on China.

“Trump said the trade war with China is merely a small dispute and emphasized that negotiations between the world’s two economic giants had not collapsed and were yet undecided,” he added.

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