The Indonesian currency doesn’t respond much to trade data releases. (Credit : CNBC)

Recession issues, Rupiah sluggish again

Siti Fatimah Adri
Politics & Economic
News Flash Indonesia
Aug 15, 2019
2448
The exchange rate of Rupiah against United States dollar (US) is still weak in today's spot market trading. US dollar is trying to approach Rp. 14,300.
On Thursday (8/15/2019) at 13:00 West Indonesia Time, US $ 1 was priced at Rp 14,270. Rupiah weakened 0.21% compared to the position of previous day's close.

The Indonesian currency doesn’t respond much to trade data releases. Central Statistics Agency (BPS) announced exports in July contracted alias fell 5.12% year-on-year (YoY) and imports were negative 15.21%. This caused the trade balance to experience a slight deficit of US $ 63.5 million.
Even so, this realization is still better than market expectations. Market consensus compiled by CNBC Indonesia estimates that exports in July contracted, aka down by 11.59% YoY and negative imports by 19.38% YoY. While the trade balance is estimated to have a deficit of US $ 384.5 million.
The cause weakening of Rupiah is thought to be due to risk perception of the recession that is getting thicker. The market sniffed a sign of a recession from yields on US government bonds.

Not only Rupiah, In forex market, the majority of major Asian currencies weakened in the face of the US dollar. The two-year tenor bond yield is higher than the 10-year term for the first time since April 2007. Short-term yields that are higher than long-term yields are called inverted yields. Therefore, many investors are truly worried because in addition to yield inversion, recession’s aura can also be seen from the release of economic data in a number of countries.

Gloomy economic data plus yield inversion also make investors more convinced that the threat of recession is no joke. As a result, capital flows away from the financial markets of developing countries, including Indonesia.

Source: https://www.cnbcindonesia.com/news/20190815121248-4-92162/data-perdagangan-tak-membantu-rupiah-lesu-gegara-isu-resesi/1