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Indonesian Trade Deficit Leads to Losses for Rupiah

June 4, 2014 at 9:54 by Vladimir Vyun

Rupiah notes and coinsThe Indonesian rupiah dropped today on speculations that the growing trade balance deficit will spur overseas investors to pull their money out of the nation’s economy, diminishing the appeal of Indonesia’s assets.

The trade gap widened to $1.96 billion in April, the highest level in nine months. It may lead to growth of the current account deficit, and this is a troubling prospect for the Indonesian economy as last year the big current account shortage led to massive capital outflows. Such poor domestic fundamentals made the rupiah undesirable for Forex traders.

USD/IDR was up from 11,785 to 11,890 as of 9:54 GMT today.

If you have any questions, comments or opinions regarding the Indonesian Rupiah, feel free to post them using the commentary form below.

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