Jakarta. Rupiah posted its strongest gain in weeks on Monday as easing geopolitical tensions in the Middle East boosted risk appetite and weakened demand for safe-haven assets ahead of key central bank meetings this week.

The Indonesian currency strengthened 151 points, or 0.85%, to close at Rp 17,708 per US dollar, compared with Friday's close of Rp 17,860.

According to Ibrahim Assuaibi, director at Traze Andalan Futures, the rupiah advanced sharply after external pressures eased following signs of de-escalation in the US-Iran conflict.

US President Donald Trump and Iran's deputy foreign minister said they had reached a preliminary agreement to end the conflict and restore shipping traffic through the Strait of Hormuz. The US and Iran are expected to sign a memorandum of understanding in Switzerland on Friday, according to Pakistan's prime minister.

“Investors are also closely monitoring how quickly Middle Eastern producers can resume oil production and exports following wartime disruptions, as well as whether more vessels will return to the region,” Ibrahim said in a statement on Monday.

The rupiah extended its gains after the United Kingdom, France, Germany, and Italy said on Sunday they were prepared to lift sanctions on Iran in response to measures related to its nuclear program.

“Market attention will now turn to policy announcements from several major central banks, with particular focus on the Federal Reserve’s monetary policy decision, the first to be led by its new chair, Kevin Warsh,” Ibrahim said.

Domestically, investors are also awaiting Bank Indonesia’s policy meeting later this week. The central bank tightened monetary policy further on June 9 by raising its benchmark interest rate by 25 basis points to 5.50%, bringing total rate hikes since May to 75 basis points.

Based on Bloomberg data as of 3:59 p.m. Jakarta time, the Singapore dollar traded at Rp 13,813, the Japanese yen at Rp 110.6, the Australian dollar at Rp 12,521, and the euro at Rp 20,541.

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