Rupiah weakens as US-Iran peace talks falter

The rupiah exchange rate weakened on Tuesday morning, falling 16 points or 0.09 percent to Rp17,859 per US dollar, compared to the previous close of Rp17,843 per US dollar.

Bank Woori Saudara analyst Rully Nova said the rupiah’s depreciation was influenced by the fragile outcome of peace negotiations between the US and Iran. “The rupiah is expected to weaken slightly today, trading in the range of Rp17,810 to Rp17,860, influenced by global geopolitical risk factors that remain fragile regarding the results of US-Iran negotiations. Although world oil prices show a downward trend and are relatively stable, the dollar index remains high at the 101 level,” he said in Jakarta on Tuesday.

Citing Sputnik, US President Donald Trump warned that he would attack Iran again if Tehran did not force its allies in Lebanon to stop “causing problems”. Media reported that the Iranian delegation left the room because of Trump’s statement and would not return unless he apologised. The threat forced the Iranian delegation to announce that they would not participate in the four-party meeting involving Iran, the US, Qatar, and Pakistan.

Additionally, another sentiment stemmed from the hawkish Federal Reserve policy. “The Fed’s future policy direction is leaning towards tightening to control inflation, with the possibility of one interest rate hike this year, which will result in the dollar index continuing to strengthen,” Rully said.

Government stimulus policies are expected to support public purchasing power and potentially maintain economic growth momentum, but with the US dollar index continuing to strengthen, room for rupiah appreciation remains very limited. The government is disbursing an economic stimulus package for the second half of 2026, with a total budget of Rp26.34 trillion. The stimulus includes transport incentives of around Rp2.04 trillion, internship and vocational programmes of around Rp6.26 trillion, and food assistance amounting to Rp18.04 trillion.