Rupiah Predicted to Consolidate Amid Middle East Geopolitical Developments

The rupiah exchange rate against the US dollar opened lower on Wednesday, weakening by 8 points or 0.04 percent to Rp17,869 per US dollar compared to the previous close of Rp17,861 per US dollar. Currency analyst Lukman Leong from Doo Financial Futures predicted the rupiah would move in a consolidative pattern amid geopolitical developments in the Middle East. “The rupiah is expected to consolidate amidst Middle East geopolitical developments that are still providing mixed signals,” he said in Jakarta on Wednesday. Citing Anadolu, Pakistani Defence Minister Khawaja Asif stated that Iran and the United States are close to reaching an agreement, although both parties remain firm on the prolonged impasse over the Strait of Hormuz. Pakistani government sources told Anadolu that Interior Minister Mohsin Naqvi will present several new proposals to Iranian leaders to resolve the deadlock, which continues to negatively impact the global economy and trade. “Reports from Pakistan indicate that the process towards a peace agreement is again showing positive developments, while Iran insists that the Strait of Hormuz will not be opened before a number of conditions are met,” Lukman explained. On the other hand, investors are said to be adopting a wait-and-see approach ahead of the release of US inflation data tonight. “Both headline and core inflation are expected to decline; year-on-year inflation is forecast to fall from 2.6 percent to 2.5 percent, while core year-on-year inflation drops from 3.5 percent to 3.4 percent,” he said. Regarding domestic sentiment, investors are reportedly anticipating the Morgan Stanley Capital International (MSCI) announcement. “The MSCI announcement is certainly still a question mark, but one possibility is that no new stocks will be included,” he stated. Based on these factors, the rupiah is predicted to trade in the range of Rp17,750 to Rp17,850 per US dollar.