Rupiah weakens amid uncertainty over US-Iran negotiation progress
The rupiah exchange rate weakened by 45 points, or 0.25 percent, to Rp17,952 per US dollar at the close of trading on Wednesday afternoon, compared to the previous close of Rp17,907 per US dollar.
Money market analyst Ibrahim Assuaibi stated that the rupiah’s depreciation was influenced by uncertainty over the progress of US-Iran peace negotiations. “Uncertainty over the progress of US-Iran peace negotiations is maintaining a geopolitical risk premium in the market, even as record-high US crude oil production underscores an increase in global supply,” he said in Jakarta on Wednesday.
Traders remained focused on developments in Qatar after Iran rejected direct talks with a senior US envoy who had travelled to the region, instead stating that any discussions would be conducted through mediators at a technical level. This shift is seen as clouding the prospects for a swift deal to transform the two-week-old ceasefire into a lasting peace agreement.
On the other hand, there has been a sharp decline in crude oil prices following the Iran conflict. Brent prices plunged around 38 percent during the second quarter after surging approximately 94 percent in the first quarter, marking the steepest quarterly decline since the record 66 percent drop in the first quarter of 2020. The global benchmark also fell around 21 percent in June after a 19 percent decline in May, the largest monthly drop since March 2020, as fears of prolonged supply disruptions through the Strait of Hormuz eased.
“The absence of direct talks has reinforced uncertainty about how quickly Washington and Tehran can resolve outstanding issues within their 60-day negotiation framework, including the future of the Strait of Hormuz,” Ibrahim said.
Furthermore, he added, US labour market data this week will be closely monitored for fresh clues on the Federal Reserve’s next policy move. The JOLTS report on Tuesday showed job openings rose to 7.594 million in May, surpassing market expectations of 7.3 million. Meanwhile, the US Conference Board Consumer Confidence Index improved in June as the US-Iran ceasefire deal lowered fuel prices.
“Attention now shifts to the ADP Employment Change report due tonight, followed by the Nonfarm Payrolls report on Thursday, which will be released a day earlier amid a holiday-shortened week in the US,” he said.
Looking at domestic sentiment, the market responded negatively to the release of Indonesia’s trade balance data, which recorded a deficit of 1.61 billion US dollars in May 2026. This is the first deficit in six years. “The deficit was caused by import values exceeding exports, with imports at 24.81 billion US dollars compared to Indonesian exports of 23.20 billion US dollars. This is Indonesia’s first deficit after a surplus for 72 consecutive months since May 2020,” he explained.
Annual inflation in June 2026 stood at 3.34 percent year-on-year. Spending groups including food, personal care, and transport were the main contributors to inflation during the period. This inflation realisation is in line with the movement of the Consumer Price Index from 108.27 in June 2025 to 111.89 in June 2026, indicating an increase over the past year but remaining within Bank Indonesia’s target range.
Bank Indonesia’s Jakarta Interbank Spot Dollar Rate also weakened today, moving to Rp17,961 per US dollar from the previous Rp17,899 per US dollar.