Here's a glimpse of Indonesia's sluggish trade data

Export sales to dip 1.7%.

According to DBS, May trade data due today will be interesting in terms of where the trade balance has headed in May after it hit a multi-year low of MYR 943mn in April.

DBS also noted export growth remaining in the red is almost a given. A sluggish external demand and overhanging uncertainties about the global recovery will continue to weigh on export sales. The headline number is expected to register a decline of 1.7% YoY.

Here's more:

While this is an improvement from a deeper contraction of 3.3% in the previous month, imports will not cooperate. It will most likely continue to outpace exports, thereby putting pressure of the trade balance.

Import growth is likely to come in at 4.3%, down from a robust expansion of 9.2% previously. While this will lifttrade balance to MYR 1.3bn for the month, it is still low by Malaysia’s standard.

Indeed, itis due to the surge in imports in April that dragged overall trade balance to its multi-year low of just MYR 943mn, from MYR 4.9bn in March. Hope is pinned on stronger export sales and a moderation in imports to deliverthe marginal improvementin trade balance.

But judging from the fact that the domestic engines have continued to churn along and external demand has remained lacklustre, downside risk on the trade balance remains high.

This is expected to exert pressure on the currency since the central bank is not likely to suppress domestic demand by hiking rates due to a benign inflation profile.

The USD-MYR has already depreciated from the post-election low of 2.96 to the recent high of 3.22. Plainly, whatever pressure on the trade balance will be reflected in the currency in the nearterm as rates are notlikely to adjust.