Rupiah strengthens amid US-Iran ceasefire agreement reports
The rupiah strengthened by 32 points (0.18%) to Rp17,814 per US dollar on Friday morning, from a previous close of Rp17,846. Woori Saudara Bank analyst Rully Nova said the rupiah’s strengthening was due to a reported 60-day US-Iran ceasefire agreement. “The rupiah is expected to strengthen within a range of Rp17,800 to Rp17,860 per dollar today, influenced by global factors including a reported 60-day US-Iran ceasefire agreement which has pushed oil prices below $100 and subdued the dollar index,” he added.
Citing Anadolu, the US and Iran have agreed on a 60-day draft agreement, according to Axios reports. While negotiators from both sides have largely finalised the terms, President Trump has not yet given final approval. A broader agreement addressing Washington’s demands on Iran’s nuclear programme still requires further negotiations.
Under the proposed memorandum, commercial shipping through the Strait of Hormuz would remain ‘unrestricted.’ Iran is also required to remove all mines from the strategic waterway within 30 days and refrain from imposing tariffs or harassment on vessels. The report added that the US naval blockade would be lifted gradually as commercial shipping activity resumes. The memorandum would also include Iran’s commitment not to pursue nuclear weapons and to prioritise negotiations on Tehran’s highly enriched uranium stockpile and enrichment activities over the 60-day period. In return, the US would agree to discuss lifting sanctions and releasing frozen Iranian funds as part of the talks, while the memorandum would also include mechanisms to facilitate the delivery of goods and humanitarian aid to Iran.
Domestically, government fiscal conditions and policy uncertainty are expected to exert further downward pressure on the rupiah. “Government policy has not changed significantly in its fiscal consolidation plan, which ensures the deficit does not exceed 3% of GDP, including funding for large-scale projects like MBG (Free Nutritious Meals) and village cooperatives, while the government’s plan to contain the pass-through of global oil price increases into domestic inflation via price controls is highly risky,” Nova said.