Indonesia experienced a 6.6% decline in exports in November compared to the same month the previous year. This was a noticeable decrease from the 2.31% drop recorded in October.
The downturn indicates ongoing challenges in global demand and economic conditions affecting the nation’s trade. Various domestic and international factors are impacting Indonesia’s trade balance as the country attempts to manage these economic hurdles.
Increasing Challenges in Trade
We have been monitoring the sharp decline in Indonesia’s exports, with the November 2025 figure of -6.6% confirming a worrying acceleration from October’s numbers. This downturn signals that slowing global demand is hitting the economy harder than we initially projected. This trend puts significant pressure on the country’s trade balance and overall growth prospects heading into the new year.
This data reinforces a bearish outlook for the Indonesian Rupiah (IDR). The recent weakening of the IDR past the 15,950 per USD level, a key psychological barrier last tested in the third quarter of 2025, suggests momentum for further depreciation. We see value in considering derivatives that profit from this, such as buying put options on the IDR or establishing long positions in USD/IDR futures.
The slowdown is also consistent with recent external data, including China’s December 2025 manufacturing PMI which fell to 49.7, indicating a contraction in activity for a key export market. Coupled with softer prices for commodities like palm oil, which historically make up over 15% of Indonesia’s exports, the fundamental picture for export-driven revenues remains weak. This situation suggests that the underperformance of commodity-linked equities will likely continue.
Market Implications and Strategies
For the equity markets, we should anticipate disappointing fourth-quarter 2025 earnings reports from major export-oriented companies, which are due in the coming weeks. The IDX Composite index is therefore vulnerable to a correction. We believe traders should look at shorting IDX futures or purchasing protective puts on broad market ETFs to hedge against this expected weakness.
This economic cooling, alongside December 2025 inflation data that eased to 2.8%, gives Bank Indonesia a clear justification to consider easing monetary policy. The market will likely begin pricing in a rate cut within the first quarter of 2026 to stimulate the economy. This makes long positions on Indonesian government bond futures an increasingly attractive strategy to capitalize on falling yields.
