Currency analyst at Doo Financial Futures, Luqman Leong, anticipates a significant decline in the value of the Indonesian rupiah against the US dollar on Monday, following the failure of the second round of negotiations between the United States and Iran. According to Leong, this failure will result in rising oil prices, which will bolster the strength of the US dollar.
On Monday morning, the Indonesian rupiah recorded a slight increase of 18 points, or 0.10%, reaching 17,211 rupiah against the US dollar, compared to its previous closing at 17,229 rupiah.
Details of the Event
Iranian President Masoud Pezeshkian confirmed that his country will not negotiate under pressure, threat, or siege. He emphasized that a suitable environment and consensus among the parties are essential conditions for effective dialogue. He noted that previous experiences in negotiations have increased the Iranian public's distrust, as negotiations were conducted under sanctions and pressures.
Pezeshkian also stressed the need to end hostile positions and ensure they are not repeated as a fundamental condition for resolving disputes. Meanwhile, it was scheduled for US Special Envoy Steve Witkoff and Jared Kushner to depart on Saturday, but reports indicated that the Iranian delegation left Pakistan before that.
Background & Context
Relations between the United States and Iran are among the most complex in international politics, having witnessed numerous crises and failed negotiations. Since the US withdrawal from the Iranian nuclear deal in 2018, tensions have escalated significantly, impacting the Iranian economy and leading to strict sanctions.
The Indonesian rupiah is sensitive to changes in oil prices, as Indonesia heavily relies on energy imports. Therefore, any increase in oil prices directly affects the value of the rupiah.
Impact & Consequences
Analysts confirm that the failure of negotiations between the United States and Iran will exert further pressure on the Indonesian rupiah, with its value expected to range between 17,100 and 17,200 rupiah against the dollar. Additionally, Indonesia's internal economic situation suffers from weakness due to budget deficits, complicating the situation further.
Despite this, Leong indicated that Bank Indonesia will increase its interventions to support the rupiah, which may help mitigate the severity of the decline.
Regional Significance
Developments in US-Iranian relations significantly impact the Arab region, as any escalation in tensions could lead to increased instability in Gulf states. Furthermore, rising oil prices may affect the economies of Arab countries that depend on oil as a primary source of revenue.
In conclusion, the failure of negotiations between the United States and Iran highlights the ongoing challenges faced by the region and underscores the importance of dialogue and understanding among nations to achieve stability.