REPUBLIKA.CO.ID, JAKARTA -- Indonesia recorded a surplus in its trade balance once again, improving the Gross Domestic Product (GDP) by 3.9 percent in June from that in the same period last year, mostly in the non-oil/gas sector.
"The trade surplus improved the current account deficit in Q2/2015, which was projected at around 2.5 percent of the GDP, by 3.9 percent from that reported in the same period the previous year," Spokesperson for Bank Indonesia (BI) Tirta Segara said in a press statement received here on Tuesday.
He added that foreign capital inflows surged despite global financial markets steeped in uncertainty.
Cumulatively, foreign portfolio inflows to the Indonesian financial market till June amounted to US$4.7 billion. Consequently, the position of foreign exchange reserves at the end of the month was US$108 billion.
This is equivalent to seven months of imports or 6.8 months of imports and servicing external public debt, which is well in excess of the international adequacy standard of three months.
In addition, the rupiah depreciated primarily due to external factors. In June, it depreciated by an average of 1.28 percent mtm to a level of Rp13,311 against the US dollar.
The rupiah was influenced by external factors such as concerns over the Greek restructuring negotiations as the deadline approached, as well as investors' anticipation of the policy direction pursued by the Federal Reserve at the Federal Open Market Committee meeting in June.
Among the internal factors was the growing demand for foreign exchange to repay debt and to make seasonal dividend payments in the second quarter to mitigate the exacerbated pressures on the rupiah.
"Moving forward, Bank Indonesia will continue to maintain the stability of the rupiah in line with its fundamental value, which will bolster macroeconomic and financial system stability," he emphasized.
Segara also pointed out that inflationary pressures were less intense than expected in June. Consumer Price Index inflation was recorded at 0.54 percent mtm or 7.26 percent yoy last month. Consequently, headline inflation in the first semester of 2015 was low at just 0.96 percent ytd.
"Core inflation was relatively controlled at 0.26 percent mtm, or 1.99 percent ytd and 5.04 percent yoy, in line with well-anchored inflation expectations. Based on actual inflation till June, Bank Indonesia is optimistic that the inflation target of 4.1 percent for 2015 will be achieved," he remarked.
According to the BI spokesman, financial system stability was solid, supported by a resilient banking system and stable financial market performance. The banking industry remained strong with credit, liquidity and market risks mitigated.
Moreover, a robust Capital Adequacy Ratio persisted in May at 20.3 percent, well above the minimum 8 percent threshold.
In addition, non-performing loans remained low and stable at 2.6 percent (gross) or 1.4 percent (net). In terms of the intermediation function, credit growth was 10.4 percent yoy, relatively unchanged from that in the previous period.
Also, deposit growth at the end of May was 12.5 percent yoy. Future credit growth is projected to improve along with escalating economic activity and a looser macro-prudential policy framed by the central bank of Indonesia, Segara noted.
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