Indonesia's trade deficit stands "uncomfortable" at USD480m

Still a lot of hurdles to deal with.

According to DBS, external imbalances will remain a key consideration at India's monetary policy meeting. Notably, the trade deficit has remained uncomfortably wide despite narrowing to USD 480mn in November, compared to USD 1.54bn in the preceding month.

This has raised external funding concerns and has manifested in the form of a weakening rupiah. The currency has already weakened by about 5% against the
USD over the past one year.

Here's more from DBS:

Cyclical tailwinds are likely to help nudge the trade balance into surplus position in the coming quarters. Through a recovery in the Chinese economy, commodity prices are likely to get a moderate boost.

More recently, a preferential trade agreement has also been reached with Pakistan and this may double Indonesia’s palm oil exports to the country over the coming months. However, a return to a trade surplus position through the export route may take some time.

The central bank (BI) is likely to maintain a mild tightening stance over the medium term to moderate the pace of import growth. For today’s meeting, we expect no change in the policy rate, but note that pressure for a hike in the FASBI deposit rate is growing.