Rupiah Weakens to Rp17,877 on US-Iran Negotiation Tensions

The rupiah exchange rate against the US dollar weakened slightly at the close of trading on Wednesday (12/8), falling 16 points or 0.09 percent to Rp17,877 per US dollar from the previous close of Rp17,861 per US dollar.

Analyst Rully Nova from Bank Woori Saudara explained that the depreciation was heavily influenced by the development of negotiations between the United States (US) and Iran. He noted that the dynamics of the relationship between the two countries have a direct impact on fluctuations in world oil prices.

According to a Sputnik report, Iran has submitted a number of conditions to the US through a mediator to reopen the Strait of Hormuz. The uncertainty surrounding these talks has disrupted the global energy supply chain.

Meanwhile, market participants are also in a wait-and-see mode ahead of the release of US inflation data scheduled for Wednesday evening, which is crucial for the future direction of US monetary policy.

On the domestic front, pressure on the rupiah was slightly mitigated by positive sentiment following President Prabowo Subianto’s nomination of Destry Damayanti as the sole candidate for Bank Indonesia Governor. The market responded well to the nomination, viewing it as a commitment to a clear and sustainable rupiah stability programme.