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- USD/IDR: Indonesia to continue to record trade surpluses, fueling the rupiah – MUFG
USD/IDR: Indonesia to continue to record trade surpluses, fueling the rupiah – MUFG
During October the Indonesian rupiah strengthened against the US dollar in terms from 14,310.0 to 14,165.0. As Indonesia’s terms of trade continuing to improve, economists at MUFG Bank expect the rupiah to enjoy further gains.
Potential downside risks looks more to be a 2022 story
“With the global supply crunch of commodities likely to keep prices elevated, including that of base metals, the terms of trade remain positive for Indonesia and should continue to lend support to the rupiah in the near-term.”
“Indonesia’s export growth remains solid with a 47.6% y/y jump in September from August’s revised 63.6% y/y. With export growth also higher in volume terms for key commodity exports, it reflects stronger external demand that should bode well for Indonesia’s merchandise trade in the near term and keep the current account deficit well-contained.”
“Potential downside risks for the rupiah would stem from the reversal of price trends of base metals and energy-related commodities like coal and natural gas when demand destruction sets in amid the slowdown in China’s economy and actions taken to limit commodity-fuelled inflation. This looks more like a 2022 story for now.”
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