Indonesia’s imports rose by 10.85% in February. A forecast of 11.2% had been expected.
The reported figure was 0.35 percentage points lower than the forecast. The update compares actual results with the market estimate.
The February import figure of 10.85% came in under the 11.2% we were watching. This suggests that domestic demand inside Indonesia is softer than anticipated, which could mean the economy is cooling down. For traders, this immediately puts a spotlight on the Indonesian Rupiah, as lower import demand means less corporate need for US dollars.
We see the path of least resistance for the USD/IDR pair as being downwards in the short term, potentially testing the 15,500 level. With inflation reportedly stable at 2.9% in March, Bank Indonesia has more room to be dovish, further weighing on the dollar against the Rupiah. Derivative traders could consider buying put options on USD/IDR or establishing short forward positions to capitalize on potential Rupiah strength.
This weak data also shifts our focus to interest rate derivatives, as the market will start pricing in a higher probability of a rate cut from Bank Indonesia later this year. We can see this reflected in recent government bond yields, with the 10-year yield falling 15 basis points last week to 6.55%. A cooling economy is typically a headwind for the stock market, so we would be cautious about long positions on the IDX Composite index futures.
However, we must remain cautious, as external factors can quickly change the picture. Looking at this from our perspective in 2025, we saw a similar situation where weak domestic data initially boosted the Rupiah before unexpected signals from the US Federal Reserve caused a sharp reversal. Therefore, using options to define risk or keeping stop-loss orders tight on any short USD/IDR positions is a prudent strategy.
