Rupiah Strengthens Today on Hopes of US-Iran Peace Deal

The rupiah exchange rate against the United States dollar opened significantly stronger in Monday morning trading. The rupiah rose 82 points, or 0.46 percent, to Rp17,778 per US dollar, compared to the previous closing position of Rp17,860 per US dollar.

Currency analyst Lukman Leong from Doo Financial Futures explained that the sharp strengthening was driven by market optimism regarding peace prospects in the Middle East, particularly between the United States and Iran.

"The rupiah has the potential to strengthen further against the US dollar amid rising hopes for peace in the Middle East, which has triggered risk-on sentiment and a decline in global crude oil prices. The US dollar index was observed falling following reports that an interim peace deal between the US and Iran has been reached," Lukman said in Jakarta on Monday.

According to a report by Iranian news agency Mehr, citing Sputnik, the final agreement between Tehran and Washington will later be ratified through a United Nations Security Council resolution. This refers to a draft memorandum of understanding that has been prepared by both parties.

Iranian Deputy Foreign Minister Kazem Gharibabadi had previously confirmed that the draft memorandum of understanding was complete. The official signing is scheduled to take place in Switzerland on Friday, 19 June.

The easing of geopolitical tensions has provided a tailwind for risky assets in emerging markets, including Indonesia. The decline in global crude oil prices due to stability in the Gulf region is also a key supporting factor for the strengthening of the domestic exchange rate.

Taking into account these fundamental factors and global sentiment, the rupiah is expected to move stably with a strengthening tendency in the range of Rp17,750 to Rp17,850 per US dollar throughout the day.