USD/IDR: IDR retreated after trade surplus narrows sharply
The IDR weakened after the trade surplus narrowed sharply to $0.4bn on frontloaded imports of energy. This stark shift in the trade balance removed a key support for the IDR.
Bank Indonesia (BI) Governor Warjiyo kept rates unchanged again (at 5.75%) in June with inflation back within target. BI opted however, not to cut rates to keep them at a level that would support the IDR.
We expect the IDR to take its direction from the balance of trade in the coming months and the IDR could come under some additional pressure if policy interest rate differentials with the US narrow further.
