Indonesia recorded a trade surplus of $1.28bn in February. This was below the expected surplus of $1.55bn.
The lower-than-expected trade surplus for February points to weakening export demand or surprisingly strong imports. This development puts downward pressure on the Indonesian Rupiah. We are now watching to see if this is a temporary dip or the start of a new trend for the coming quarter.
This miss isn’t a total surprise, as we’ve seen prices for key commodities like palm oil and nickel soften in early 2026. Data from the first quarter shows Newcastle coal futures, a major export, have fallen over 8% since January. This global demand trend directly eats into the country’s export revenues and the value of its currency.
Given this outlook, we are considering positions that would benefit from a weaker Rupiah against the US dollar. Buying short-dated USD/IDR call options could be a prudent strategy. This allows us to gain from potential currency depreciation while capping our downside risk if the currency unexpectedly strengthens.
We must also watch Bank Indonesia’s response, as a weaker currency can fuel inflation. The latest inflation figures for March 2026 ticked up to 3.1%, which may limit the central bank’s ability to support the economy with rate cuts. Any hints of intervention or a more hawkish stance could introduce volatility into currency markets.
We saw a similar pattern during the second quarter of 2025 when a slump in commodity prices led to a shrinking surplus. That period was followed by a 2% depreciation of the Rupiah over the subsequent six weeks. History suggests the current market reaction could have further to run if export figures do not recover quickly.
