Rupiah Weakens Triggered by Rising Global Oil Prices

The rupiah exchange rate weakened by 9 points, or 0.05 percent, to Rp17,813 per US dollar on Monday morning, compared to the previous close of Rp17,804 per US dollar. Analyst Rully Nova from Bank Woori Saudara stated that the rupiah’s depreciation was triggered by rising global oil prices. “The rupiah is expected to weaken today, trading in the range of Rp17,780 to Rp17,830, influenced by the global factor of increasing oil prices following President Trump’s threat to attack Lebanon if Hezbollah continues to strike Israel, jeopardising the US-Iran negotiations scheduled in Switzerland,” he said in Jakarta on Monday. Citing Sputnik, the Iranian delegation left the negotiation site with the United States in Switzerland on Sunday as a protest against President Donald Trump’s threats. Subsequently, Iran’s chief negotiator Mohammad Bagher Ghalibaf urged the US to be cautious in its statements and affirmed the readiness of Iran’s armed forces to respond to any threats. The technical-level talks between Iran and the US, mediated by Pakistan and Qatar, were held behind closed doors in the Burgenstock resort area of the Alps on Sunday. On the domestic front, the government is reportedly set to disburse a number of incentives to boost the economy. “However, the Morgan Stanley Capital International (MSCI) announcement will be a focus for the market, whether Indonesia’s stock market will be downgraded or remain in emerging markets (EMs),” Rully said. “It is likely to be downgraded to frontier status due to the plan to channel strategic commodity exports through a single government institution. The governance of this plan is very risky. The regulatory and legal framework has not been updated. For example, the current investment framework still operates under the old investment law.”