Rupiah Predicted to Strengthen as Middle East Tensions Ease

Jakarta (ANTARA) - Lukman Leong, an analyst at Doo Financial Futures, has predicted that the rupiah will strengthen as geopolitical tensions in the Middle East subside.

“The rupiah has the potential to strengthen against the US dollar amid easing geopolitical tensions in the Middle East, following the cessation of mutual attacks between the United States and Iran,” he told ANTARA in Jakarta on Monday.

Citing Anadolu, there were no reports of new attacks by either the United States or Iran for the second consecutive night, while Pakistan and Qatar stepped up mediation efforts to encourage de-escalation of the conflict between Washington and Tehran.

According to the US Central Command (CENTCOM), the pause came after nearly two weeks of American strikes targeting Iranian military infrastructure, coastal surveillance systems, missile and drone facilities, naval assets, and logistics centres.

Pakistani government sources told Anadolu that Islamabad and Doha are now intensifying the exchange of messages between the United States and Iran.

The move came after both parties conveyed their responses to a joint formula proposed by mediators to end the conflict, which has lasted several months.

Iranian military spokesman Amir Mohammad Akraminia said Tehran’s strategy is based on the principle of “deterrence through retaliation”, meaning Iran’s military response depends on the actions of the United States.

However, Lukman believes the rupiah’s strengthening will be limited as investors tend to wait and see 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 grow 2.3 per cent quarter on quarter (QoQ), while core PCE inflation rose 0.1 per cent (QoQ),” he said.

In addition, the market is also awaiting the Federal Open Market Committee (FOMC) meeting, which is likely to touch on the recent rise in global oil prices and concerns about renewed inflationary pressure.

Based on these factors, the rupiah is predicted to trade in the range of Rp17,900 to Rp18,000 per US dollar.