Rupiah weakened against US dollar in today's (12/8/19) trade (Credit : CNBC)

No sign of the trade war over, Rupiah has weakened again

The external sentiment still seems to be the main driver of Rupiah. Because in today's trade (12/8/19), Rupiah weakened against United States (US) dollar.

As the result of trade war, today People's Bank of China (PBoC) is again depreciating yuan exchange rate against the US dollar. PBoC sets yuan in middle rate at 7.0211 / US $ weaker than Friday (9/8/19) then at 7.0136 / US $. Since beginning of last week, Yuan has consistently been depreciated to the lowest level since March 2008.

Weakening of Yuan is certainly not good news for Indonesia. Because even though the price of products from China is cheaper, Indonesia may be flooded with products from the bamboo curtain country. If this occurs without an increase in exports, the trade balance will experience a large deficit. Not only that, current account deficit (CAD) will also swell.

Whereas last Friday, Bank Indonesia (BI) reported that the current account deficit (CAD) broke 3% level of Gross Domestic Product (GDP) to be exact 3.04% in the second quarter of 2019. This is certainly not good news, considering that in the previous quarter, CAD was only at 2.6%. Nominally, CAD in the second quarter of 2019 was valued at US $ 8.44 billion. CAD in the second quarter of 2019 was also deeper than CAD in same period last year (second quarter of 2018) which amounted to 3.01% of GDP.

Meanwhile, the International Monetary Fund (IMF) also urged United States (US) and China to immediately complete an escalating trade war. In a new report published last weekend by executive board at IMF, directors have recommended that the two countries make a comprehensive agreement so as not to upset the global economy.

Source: https://www.cnbcindonesia.com/market/20190812110834-17-91282/perang-dagang-jauh-dari-kata-reda-rupiah-keok-lagi