Rupiah Strengthens to Rp17,851 on Reports of US-Iran Restraint
The rupiah exchange rate against the US dollar strengthened by 71 points, or 0.40 per cent, to Rp17,851 per US dollar at the close of Monday afternoon trading, down from the previous Rp17,922 per US dollar.
Lukman Leong, an analyst at Doo Financial Futures, stated that the rupiah’s appreciation was triggered by the response to reports that the US and Iran will exercise restraint after tensions escalated over recent days.
“The rupiah, along with regional and major global currencies, generally strengthened against the US dollar in response to reports that the US and Iran will ‘restrain themselves for now’ and that talks are proceeding as planned,” he told ANTARA in Jakarta on Monday.
Citing Anadolu, Iran condemned US attacks on several locations along its southern coast, accusing Washington of violating the United Nations (UN) Charter and a recently signed pact to end the war. Iran subsequently responded by destroying eight US military facilities in Kuwait and Bahrain through a series of missile and drone attacks.
The conflict subsequently subsided following an Axios report stating that the US and Iran had agreed to cease hostilities and would hold a meeting in Qatar on Tuesday (30/6) to discuss disputes regarding the Strait of Hormuz. According to the report, the resurgence of clashes was triggered by differing interpretations of the implementation of the Memorandum of Understanding (MoU) ending the war, specifically provisions related to the Strait of Hormuz.
“Oil prices, which are also relatively stable, have eased concerns regarding supply disruptions,” said Lukman.
Regarding hawkish statements and expectations for Federal Reserve (The Fed) interest rates, he continued, these factors will continue to support the US dollar and pressure the rupiah from time to time.
“For this week, sentiment could continue, but investors remain in a ‘wait and see’ mode regarding a series of important US economic data, such as manufacturing and Non-Farm Payrolls (NFP). If this data remains strong, Fed officials will continue their hawkish rhetoric moving forward,” he said.
Bank Indonesia’s Jakarta Interbank Spot Dollar Rate (JISDOR) also moved stronger today, reaching the level of Rp17,956 per US dollar from the previous Rp17,962 per US dollar.