Indonesia Logs in $3.4 Billion Trade Surplus

Indonesia saw a trade surplus of $3.48 billion last month, exceeding expectations, as both exports and imports decreased less than anticipated, according to official data released on Wednesday. This has led to speculation that the central bank may decide to maintain current interest rates next week. The October trade surplus was unexpected, coming in at $4 billion instead of the $3 billion that economists had predicted in a Reuters poll. This surplus will be taken into account by Bank Indonesia (BI) as it evaluates monetary policy in November.

The value of shipments from the largest economy in Southeast Asia has been decreasing in recent months due to the decline in global commodity prices. Nevertheless, the country, abundant in resources, has maintained a trade surplus, albeit smaller than the previous year, due to a decline in imports. Since May 2020, Indonesia has consistently achieved a surplus every month.

In a surprise move last month, the central bank resumed raising interest rates in order to protect the declining value of the rupiah. This brings the total rate increases since August 2022 to 250 basis points (bps). According to Bank Danamon's economist, Irman Faiz, the trade data for October indicates a strengthening of domestic demand despite a decrease in exports.

He said that the surplus and the rupiah's appreciation of over 1 percent on Nov 15 should be enough to persuade BI to maintain its benchmark rate unchanged next week.