Rupiah Predicted to Strengthen as Middle East Tensions Ease

Analyst Lukman Leong from Doo Financial Futures predicts the rupiah will strengthen against the US dollar amid easing geopolitical tensions in the Middle East, following a cessation of mutual attacks between the United States and Iran. Citing Anadolu, there have been no reports of new attacks from either side for a second consecutive night, while Pakistan and Qatar intensify mediation efforts to de-escalate the conflict between Washington and Tehran. According to US Central Command (CENTCOM), the pause follows nearly two weeks of American strikes targeting military infrastructure, coastal surveillance systems, missile and drone facilities, naval assets, and logistics centres in Iran. A Pakistani government source told Anadolu that Islamabad and Doha are now intensifying message exchanges between the US and Iran, after both parties responded to a joint formula proposed by the mediators to end the months-long conflict. Iranian military spokesperson Amir Mohammad Akraminia stated that Tehran’s strategy is based on the principle of ‘deterrence through retaliation’, making Iran’s military response contingent on US actions. However, Lukman believes the rupiah’s strengthening will be limited as investors adopt a wait-and-see approach ahead of a series of important US economic data releases, including Gross Domestic Product (GDP) and Personal Consumption Expenditures (PCE) inflation. US GDP is estimated to have grown 2.3 per cent quarter-on-quarter, while core PCE inflation rose 0.1 per cent quarter-on-quarter. Markets are also awaiting the Federal Open Market Committee (FOMC) meeting, which may address the recent rise in global oil prices and concerns over renewed inflationary pressures. Based on these factors, the rupiah is forecast to trade in the range of Rp17,900 to Rp18,000 per US dollar.