May’s surprise trade deficit and rising inflation pressure Indonesia’s economy, weighing on the Rupiah amid broader USD strength.
The Indonesian Rupiah slid against the USD, trading near 18,000 in Asian hours Friday, as May’s $1.61 billion trade deficit—its first since 2020—raised economic concerns. Falling exports and surging imports contributed to the deficit, while June inflation hit a three-month high of 3.34%.
The USD held firm despite weaker-than-expected US jobs data, with Nonfarm Payrolls adding just 57,000 jobs in June, missing forecasts of 110,000. The unemployment rate dipped to 4.2%, but the hiring slowdown fueled expectations of a cooling US economy.
Markets now price a 52% chance of a September Fed rate hike, down from 66% pre-data. Fed Chair Kevin Warsh reaffirmed the 2% inflation target, noting moderating inflation risks.