Tuesday, May 26, 2009

USD / IDR trade balance deficit is decreased

I have data that shows US trade balance with Indonesia. As we all know in international trade a country trade balance against another country is an indicator to the strength of its currency against the other country. The concern is that the US trade balance deficit with Indonesia is decreased. Is it a signal that USD will appreciate in the near term ?

This is the 2008 trade blance data

Month

Exports

Imports

Balance

Jan-08

463.2

1,297.50

-834.3

Feb-08

443

1,151.00

-708

Mar-08

532.4

1,212.80

-680.5

Apr-08

582.3

1,311.80

-729.5

May-08

434.3

1,293.30

-859.1

Jun-08

487.4

1,219.10

-731.7

Jul-08

539.2

1,453.50

-914.3

Aug-08

629

1,557.50

-928.5

Sep-08

588.7

1,392.90

-804.1

Oct-08

496.7

1,553.10

-1,056.40

Nov-08

329.7

1,159.40

-829.7

Dec-08

387.2

1,197.00

-809.8

TOTAL

5,913.10

15,799.00

-9,885.90


This is the data from January to March 2009

Month

Exports

Imports

Balance

Jan-09

269.1

1,208.50

-939.4

Feb-09

304.2

1,008.20

-704

Mar-09

396.9

1,036.40

-639.5

TOTAL

970.2

3,253.20

-2,283.00



I assumed that the IDR appreciating against USD in the last few months is mainly due to the flow of funds from US to Indonesia which are place in financial instruments such as government bonds and equities. If this is the case, we have to prepare for a significant IDR correction in the near term.

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