US-Iran Ceasefire Yet to Restore Investor Confidence
The Indonesian government faces a policy dilemma with no truly comfortable options.
Apindo Chair Shinta Widjaja Kamdani assesses that the two-week ceasefire between the United States (US) and Iran has not yet fully restored investor confidence.
According to her, this pause in the conflict can indeed improve market sentiment in the short term, particularly as the risk of disruptions in the Strait of Hormuz temporarily subsides.
“However, for business actors, investor confidence does not usually recover fully just because of a two-week pause,” she stated to Media Indonesia on Wednesday (8/4).
She explained that investors will still act cautiously by conducting a comprehensive assessment of future developments. This includes certainty regarding more permanent diplomatic channels, security of energy supply chains, and stability in commodity price volatility.
“So, in general, we see this as more of an initial positive signal that can reduce market psychological pressure, but it is not sufficient to eliminate the wait-and-see attitude,” she clarified.
From the business world’s perspective, the ceasefire remains a positive development as it provides space for de-escalation and eases short-term pressures, particularly on energy prices and market risk perceptions. The market response has been swift, reflected in the drop of Brent oil prices below US$100 per barrel following the announcement.
Nevertheless, Shinta views the two-week duration as still too short to provide solid certainty for business actors. Thus, this situation is more appropriately seen as temporary relief rather than a final resolution, given that the ceasefire’s sustainability depends on on-the-ground dynamics and the continuation of negotiations.
Regarding implications for domestic inflation, Shinta mentioned that if the ceasefire can hold and reduce the energy risk premium, inflationary pressures, especially from the energy side, have the potential to be more controlled compared to a scenario of prolonged conflict.
She added that the main risk previously stemmed from surges in oil prices and logistics costs due to supply disruptions. However, transmission to domestic inflation will not occur instantly because food prices, transportation, and distribution costs are still influenced by cost pressures and raw material availability.
Meanwhile, on the exchange rate side, she assessed that the rupiah remains vulnerable to global geopolitical dynamics, including oil price movements and capital flows. Before the ceasefire announcement, the rupiah had weakened to around Rp17,090 per US dollar, necessitating interventions by Bank Indonesia in the foreign exchange market to maintain stability. In a situation of heightened global uncertainty, the room for interest rate easing also becomes more limited as policy focus is directed towards exchange rate and inflation stability.
“So, the risks to the rupiah have not disappeared. Only if this ceasefire leads to a more sustainable conflict resolution,” she said.
She explained that if the energy market becomes more stable, the pressure on the rupiah has the potential to be more manageable or maintained compared to during full conflict escalation.