Indonesia one of the next emerging economic giants?

Is your high street bank overcharging you?

Currency update for IDR

Earlier this year Indonesia along with Nigeria, Mexico and Turkey were identified by economist Jim O’Neill as the new emerging economic giants for the foreseeable future, these 4 countries have been termed as with the acronym “MINT”. In 2001 he coined the term “BRIC” for Brazil, Russia, India and China. The BRIC economies are all now in the world’s top 10 for GDP and are estimated to be in the top 5 by 2050. Similar growth is expected in these new emerging economies with Indonesia expected to be in the top 10 for GDP come 2050. The reason for the expected growth is a healthy job market where the number of workers far outweighs those not working. Growth rates are expected to reach double figures on a yearly basis in the near future. Indonesia is known as commodity producer having resources in oil, gas, copper and gold plus a strong agriculture section. Over the coming years its service sector is expected to grow rapidly as Indonesians wealth gradually increases. Its location also makes it attractive as it links China, Japan and Australasia nicely and is close to other emerging markets like the Philippines.

So what for the Indonesian Rupiah?

IDR has steadily been losing ground against the USD over the last year; it has weakened around 23% since this time last year. This is mainly due to the weakening of commodity prices which has not only affected Indonesia but also Australia and China. Commodity prices are widely expected to recover this year, however not to the levels we have seen in 2011-2012. We would expect therefore for this to give IDR a boost, as the commodity price recovers so should the exchange rate.

GDP growth is expected to be 5.8% for 2014 which is encouraging and as long as inflation stays under control the year could be positive for the IDR. IDR is tied quite heavily to the fortunes of the USD so when the FED announced that it would start to taper it’s QE policy this had a negative effect on IDR as there was a worry of a sudden withdrawal of funds from the country. Further FED tapering has yet to be announced and although widely expected this year, there is no guarantees that will follow through especially after this month’s disappointing non-farm payroll figure.

Indonesia is also set for presidential elections in July so we may have to wait until the second half of the year before we see an improvement in the rate for IDR sellers. Once the elections are out of the way and if the economy improves as expected we should see the USD/IDR rate move downwards towards 11,000. At the moment though the USD/IDR rate is very good for buyers and is just off the highest levels of the last 5 years, the GBP/IDR is even better and is at 10 year highs. If you are a buyer you would be well advised to take advantage of the current rate and lock in 6 months to 1 years’ worth of exposure on a forward basis.

Company Details

Indonesia one of the next emerging economic giants?

Get a quick quote

Open Account with Moneycorp

Moneycorp are located at:
The Zig Zag Building, 70 Victoria Street, Greater London, SW1E 6SQ, United Kingdom

Get a Quick Quote

Newsletter Signup to CMT

Sign up to our foreign exchange newsletter to receive news updates directly by email

Compare Money Transfer will not Share your details!

Bank Exchange Rates Comparison

High St Bank Exchange Rate

All Rights Reserved: Copyright 2006 - 2018 Compare Money Transfer Limited offering FCA Regulated Suppliers - 34 New House, 67-68 Hatton Garden, London, EC1N 8JY. +44 (0) 843 357 4882