DistantNews
Support us
🇮🇩 Indonesia /Economy & Trade

US-Iran Peace Deal Boosts Global Economy, Rupiah Awaits Positive Impact

From Republika · () Indonesian

Translated from Indonesian, summarized and contextualized by DistantNews.

At a glance

News Named sources Context piece
  • A peace deal between the US and Iran is seen as positive for the global economy.
  • However, its immediate impact on Indonesia's rupiah and financial markets is uncertain.
  • Domestic factors also continue to influence the rupiah's performance.

A recent peace agreement between the United States and Iran is generating positive sentiment for the global economy, potentially easing geopolitical tensions in the Middle East and lowering energy prices. Economists suggest this could reduce global financial market uncertainty, offering a generally favorable outlook.

In general, the developments in negotiations between the US and Iran are a very good signal for the global economy, including Indonesia.

— Dipo Satria RamliAn economist at the Center of Reform on Economics (CORE) Indonesia, Dipo Satria Ramli, commented on the potential economic impacts of the US-Iran peace deal.

Despite the positive global signals, the direct and immediate impact on Indonesia's currency, the rupiah, and its domestic financial markets remains uncertain. Experts believe that while the reduction in geopolitical risk is a good sign, it will take time for trade channels to normalize and for Indonesia's country risk perception to decrease.

The market immediately responded positively, reflected in the beginning of a decrease in world oil prices.

— Dipo Satria RamliDipo Satria Ramli noted the market's reaction to the news, specifically mentioning the drop in oil prices.

Furthermore, the recent weakening of the rupiah is not solely attributed to external factors. Domestic issues are also playing a significant role in how investors assess Indonesia's financial assets. The fact that neighboring currencies like the Singapore dollar, Malaysian ringgit, and Thai baht have strengthened while the rupiah has weakened indicates that internal economic conditions are a key concern.

As for the IHSG and rupiah, it's not necessarily going to improve immediately. There is indeed a decrease in risk or risk-off, but it will take time for trade channels to normalize and also for Indonesia's country risk to decrease.

— Dipo Satria RamliDipo Satria Ramli cautioned that the positive effects on Indonesia's stock market and currency would not be instantaneous.

While improved global sentiment from de-escalated geopolitical conflicts may create space for financial market stabilization, the medium-term strengthening of the rupiah will ultimately depend on improvements in domestic factors. These factors are crucial for shaping investor perceptions of Indonesia's risk profile.

Because until now, Indonesia's currency has weakened while neighboring currencies like the Singapore dollar, Malaysian ringgit, and Thai baht have actually strengthened. This means the rupiah's weakening is not solely due to global factors.

— Dipo Satria RamliDipo Satria Ramli pointed out that the rupiah's weakness is also influenced by domestic factors, contrasting it with stronger regional currencies.
DistantNews Editorial

Originally published by Republika in Indonesian. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

More Stories

From Our Blog