Economist: Rupiah's Prospects Determined by Post-Truce Direction of US-Iran Conflict

Jakarta (ANTARA) - Josua Pardede, Head Economist at Permata Bank, believes that the future prospects for the rupiah exchange rate will heavily depend on the direction following the US-Iran truce—whether it marks the beginning of conflict de-escalation or merely a tactical pause that risks renewed external pressures.

“This agreement (temporary ceasefire) is still far from a resolution; the core issues of the conflict remain unresolved, and the real test lies in whether shipping traffic in the Strait of Hormuz truly returns to normal,” Josua said when contacted by ANTARA in Jakarta on Wednesday.

He added that there are assessments suggesting that if it is only a delay, oil prices are likely to stabilise around $100 per barrel as a new baseline, rather than quickly reverting to pre-war levels.

“I see the news of the temporary ceasefire between the US and Iran as providing a positive cushion for the rupiah, but its impact is more about containing pressure than driving significant strengthening,” Josua stated.

Subsequently, the dollar index weakened by around 0.6-0.7 per cent, US Treasury yields declined, and markets reopened the possibility of a Federal Reserve rate cut of up to about 60 per cent by year-end.

For the rupiah, Josua noted, this combination of factors reduces pressure from energy imports, dampens the push for dollar strengthening as a safe-haven asset, and slightly improves risk appetite towards emerging market assets.

“Even before this news, the market was very cautious. I assess that the ceasefire sentiment is not yet strong enough to decisively reverse the rupiah’s direction, but it is significant enough to prevent deeper weakening in the very short term,” he said.