Rupiah Weakens as US-Iran Peace Talks Reach Impasse

RRI.CO.ID, Jakarta - The Indonesian rupiah edged lower on Monday morning, May 11, 2026, as stalled diplomatic negotiations between the United States and Iran fueled global uncertainty. The deadlock has bolstered the US dollar and sent crude oil prices climbing, creating a challenging environment for emerging market currencies.

In early Monday trading, the rupiah slipped 4 points, or 0.02 percent, to IDR 17,386 per US dollar, down from its previous close of IDR 17,382. Market analysts suggest that the escalating tensions in the Middle East are the primary driver behind the currency's current volatility.

Lukman Leong, a currency analyst at Doo Financial Futures, noted that the stalemate in Washington-Teheran relations is directly impacting investor sentiment. “The rupiah is expected to weaken as the dollar and world crude oil prices strengthen following signs that talks between the United States and Iran have reached a dead end,” Leong said, as quoted by Antara.

The friction intensified following Iran's rejection of a US peace proposal. Reports from Iran’s ISNA news agency indicated that Teheran’s counter-response focused on ending hostilities and ensuring maritime security in the Persian Gulf and the Strait of Hormuz. However, US President Donald Trump characterized Iran's response as highly unacceptable.

Key sticking points in the negotiations reportedly include several complex demands from Teheran. These include issues surrounding sanctions and assets, specifically Iran's demand for the lifting of economic sanctions and the unfreezing of assets currently held abroad.

Furthermore, negotiations are stalled over maritime control, with Teheran’s insistence on gaining full control over the Strait of Hormuz. Finally, the country has introduced a requirement for war reparations, calling for the US to compensate Iran for various war-related losses.

On the home front, Indonesian investors are maintaining a cautious stance ahead of the latest consumer confidence survey. Internal forecasts suggest the index may dip to 122 from a previous level of 122.9, further dampening short-term optimism.

Despite these pressures, the rupiah is projected to remain within a relatively stable range. Analysts predict the currency will fluctuate between IDR 17,300 and IDR 17,400 per US dollar for the remainder of the trading day, depending on further geopolitical developments and domestic data releases. ***