Indonesia recorded a trade surplus of USD0.87bn, which was lower than Jan-24's surplus of USD2.02bn. Exports contracted in Feb-24 (-5.79% MoM) to USD19.31bn, driven by a decline in non-oil and gas exports.
Export performance in Feb-24 experienced a decline of -5.79% MoM compared to Jan-24. The decrease in non-oil and gas exports was driven by the slow recovery in demand from major trading partners, particularly from China (-10.75% MoM) and India (-14.48% MoM).
Indonesia's trade surplus until Feb-2024 hasn’t significantly uplift the rupiah. Despite monthly foreign exchange term deposit placements from Q1 export earnings, ranging between USD650-USD700 million.
Should the Fed initiate its first rate cut by mid-year or extend it to Q4 due to recent events, prospects for foreign capital inflows into the domestic financial market are expected would improve. We forecast the rupiah to range between IDR15,550 and IDR16,050 in 2024F.
Domestically, weakening exports and a contraction in foreign reserves, from USD145bn in Jan-24 to USD144bn in Feb-24, may prompt further rupiah depreciation. Furthermore, the government's debt position, reaching IDR8.319tn as of Feb-24, increases the debt-to-GDP ratio to 39.06% at the end of February.
