Rupiah Strengthens on Positive Signals from Iran-US Negotiations

Jakarta (ANTARA) - The rupiah exchange rate strengthened by 32 points, or 0.18 percent, to Rp17,963 per US dollar at the close of trading on Friday, from Rp17,995 per US dollar previously.

Money market analyst Ibrahim Assuaibi assessed that the rupiah’s strengthening was influenced by positive signals from negotiations between Iran and the United States.

“Investors continue to monitor negotiations between Washington and Tehran after US President Donald Trump said he believed Iran had ‘agreed to almost everything we need,’ signalling confidence that discussions are moving in the right direction,” he told ANTARA in Jakarta.

However, he noted that the Wall Street Journal reported Tehran had rejected a proposal to relinquish its claims over the Strait of Hormuz in exchange for the release of billions of dollars in frozen Iranian funds. The report said Washington had offered financial incentives, including access to frozen assets, to secure unrestricted passage through the strategic waterway, but Iran has so far refused the proposal.

The mixed signals mean geopolitical risk remains a concern for traders, even as fears of immediate disruption to Gulf crude oil supplies continue to ease.

“The market is now watching for further developments in the US-Iran negotiations, Gulf crude oil flows, and signs of demand recovery after the US weekend holiday to get a new direction for oil prices,” Ibrahim said.

Another sentiment came from the US Bureau of Labor Statistics, which showed the US economy added 57,000 jobs in June, well below market expectations of 110,000. Meanwhile, May payroll figures were revised down to 129,000 from the previously reported 172,000. The unemployment rate unexpectedly edged down to 4.2 percent from 4.3 percent, while average hourly earnings rose 0.3 percent month-on-month and 3.5 percent year-on-year, in line with market expectations.

“The weak Non-Farm Payroll data helped cool expectations for tighter monetary policy from the Federal Reserve. According to the CME FedWatch Tool, the probability of a rate hike in September fell to 51 percent from 63 percent before the data release,” he said.

The Bank Indonesia Jakarta Interbank Spot Dollar Rate (JISDOR) weakened to Rp17,960 per US dollar from Rp17,994 per US dollar previously.