Rupiah strengthens amid temporary US-Iran ceasefire

Jakarta (ANTARA) - The rupiah exchange rate strengthened by 120 points or 0.70 percent to Rp16,985 per US dollar on Wednesday morning from the previous close at Rp17,105 per US dollar.

Woori Saudara Bank analyst Rully Nova stated that the rupiah’s strengthening was influenced by the easing of external pressures following the temporary ceasefire between the US and Iran.

“The rupiah is expected to strengthen slightly today in the range of Rp17,050 - Rp17,100, influenced by the easing of external pressures after the two-week (war) pause (between the US and Iran). This is pushing oil prices and the dollar index down,” he told ANTARA in Jakarta on Wednesday.

Quoting Sputnik, US President Donald Trump announced a ceasefire with Iran, to be observed by both sides for two weeks, and stated that the Strait of Hormuz would soon be opened.

According to Trump, the agreement was mediated by Pakistani Prime Minister Shehbaz Sharif and Chief of Army Staff Marshal Asim Munir, who urged Trump to suspend bombing and attacks on Iran.

The Iranian government will begin talks with the United States in Pakistan’s capital, Islamabad, on Friday (10/4).

Iran’s Supreme National Security Council affirmed that the ceasefire would be announced this week and that negotiations do not mean the war with the United States is over. If America makes “even the slightest mistake” during the upcoming talks, Iran will respond with full force.

Looking at domestic sentiment, pressures are increasing as market participants monitor government fiscal pressures and the budget deficit, as well as the release of foreign exchange reserve data to be announced by Bank Indonesia this afternoon.

“The biggest pressure is on subsidised fuel (BBM) spending and the tax ratio with a downward trend, where if referring to the first quarter budget deficit that is approaching 1 percent, there are concerns that the budget deficit will breach 3 percent this year,” Rully revealed.