Rupiah strengthens to Rp17,709 as US and Iran agree to end war

The exchange rate of the rupiah against the US dollar strengthened by 152 points, or 0.85 percent, to Rp17,709 per US dollar at the close of trading on Monday afternoon, compared to the previous Rp17,860 per US dollar. Money market analyst Ibrahim Assuaibi attributed the strengthening to an agreement reached between the United States and Iran to end the war. “US President Donald Trump and Iran’s deputy foreign minister stated they have reached a preliminary agreement to end the conflict and resume traffic through the Strait of Hormuz,” he said in a written statement in Jakarta on Monday. The US and Iran are reportedly set to sign a memorandum of understanding in Switzerland on Friday (19/6), according to Pakistan’s prime minister, whose country has acted as a mediator. Trump said on Sunday that the Strait of Hormuz would be opened “free of charge” and the US naval blockade of Iranian ports would also end. Iran’s semi-official Mehr news agency reported that the draft agreement calls for the reopening of the Strait of Hormuz within 30 days under Iranian arrangements. Investors are also closely watching how quickly Middle Eastern producers can resume oil production and exports following war-related damage, and whether more vessels will enter the region. Iran’s Deputy Foreign Minister Kazem Gharibabadi indicated that a broader agreement would be negotiated during a 60-day ceasefire period. “The E4 countries, comprising the UK, France, Germany, and Italy, stated on Sunday (14/6) that they are ready to lift sanctions on Iran in response to steps related to its nuclear programme,” Ibrahim noted. Bank Indonesia’s Jakarta Interbank Spot Dollar Rate (JISDOR) also moved stronger on the day, reaching Rp17,719 per US dollar from the previous Rp17,912 per US dollar.