The inflation rate (consumer price index / CPI) announced in June by 1.03% month-on-month (mom), or up 5.9% year over year (yoy). The announcement is below forecast and consensus, respectively 1.2% mom and 1.09% mom.
Is Bank Indonesia will raise interest rates again? The newspaper assess central bank will totally raise interest rates by 50 basis points (bps) until August, and the rise of 25 bps will be done at the next governing council meeting (July 11, 2013). Action was carried out in order to reduce expectations that inflation will rise and to help stabilize the exchange rate.
The trade balance also improved in May, the deficit fell to USD 0.6 billion from USD 1.7 billion in April. Cash crunch conditions in China would impact the external balance. Exports to China from Indonesia reached USD 21 billion in 2012, 11% of the total exports. The estimation is that every 1% increase in GDP of China will raise 4 ppt of Indonesian export4. It still believe in predictions that rupiah is Rp9.780 per U.S. dollar in 2013.
for Indonesia Market Summaries 2 July 2013
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