Potential US-Iran Peace Negotiations Not Strong Enough to Support Rupiah Exchange Rate
Jakarta (ANTARA) - The rupiah exchange rate closed at Rp17,143 per US dollar on Wednesday, weakening by 16 points or 0.09 percent from the previous close of Rp17,127 per US dollar.
Muhammad Amru Syifa from the Research and Development of the Indonesia Commodity & Derivatives Exchange (ICDX) stated that the potential for US-Iran peace negotiations is not yet strong enough to support the rupiah exchange rate.
“External pressures still dominate, even though the US dollar temporarily weakened. Market optimism regarding the potential achievement of a peace agreement between the United States and Iran is a factor holding back the dollar’s strengthening, but it is not yet strong enough to drive significant rupiah appreciation,” he told ANTARA in Jakarta on Wednesday.
Looking at global sentiment, the market received positive impetus from US President Donald Trump’s statement opening the possibility of negotiations with Iran in the near future in Pakistan. This increased risk appetite and pressured the US dollar, but uncertainty remains high as market participants tend to be cautious and avoid taking large positions, given that policy directions can change quickly.
A Sputnik report revealed that US Vice President JD Vance is likely to lead the US delegation again in the second round of negotiations with Iran if it takes place.
US President Donald Trump stated that the next round of negotiations between Washington and Tehran could take place in the next two days in Pakistan.
Previously, talks were held in Pakistan’s capital, Islamabad, over the past weekend to permanently end the US-Zionist Israel war against Iran that began on 28 February, but no agreement was reached.
Efforts to hold the next round of discussions are ongoing.
On the domestic side, Bank Indonesia continues to optimise its policy mix in a pre-emptive and measured manner through interventions in the foreign exchange market (Non-Deliverable Forward/NDF, Domestic Non-Deliverable Forward/DNDF, and spot) as well as purchases of Government Securities (SBN).
Support is also said to come from strong foreign exchange reserves of $148.3 billion, strengthening of underlying-based transactions, and expansion of Local Currency Transactions (LCT).
“Close coordination with the government in maintaining a prudent state budget (APBN) is also an important factor in safeguarding rupiah stability,” said Amru.
Bank Indonesia’s Jakarta Interbank Spot Dollar Rate (JISDOR) today also moved weaker to Rp17,141 per US dollar from the previous Rp17,135 per US dollar.