Jakarta. Rupiah rallied against the US dollar on Wednesday as progress in US-Iran negotiations, easing concerns over disruptions around the Strait of Hormuz and Bank Indonesia’s decision to hold interest rates supported the Indonesian currency.

The rupiah strengthened 66 points, or 0.37%, to close at Rp 17,818 per dollar on Wednesday (Sept. 23), recovering from Tuesday’s 0.21% decline to Rp 17,884. The dollar index, meanwhile, rose 0.2% to 100.8.

Ibrahim Assuaibi, director of Traze Andalan Futures, said developments in US-Iran relations were among the factors supporting the rupiah. US President Donald Trump said American officials had held a three-hour meeting with Iranian representatives in New York, raising hopes for progress in negotiations.

“Trump described the meeting as very good and productive, raising hopes that negotiations could help ease the conflict and disruptions around the Strait of Hormuz,” Ibrahim said on Wednesday.

The meeting marked the first direct contact between US and Iranian officials since June. Iran has also signaled its willingness to reopen the Strait of Hormuz if Washington eases military pressure and lifts its blockade of Iranian ports. However, a final agreement has yet to be secured.

Ibrahim said further support came from Saudi Arabia, which had resumed operations on its East-West oil pipeline, allowing crude shipments to reach the Red Sea port of Yanbu without passing through the Strait of Hormuz.

The pipeline had previously been shut down following a drone attack earlier this month. Despite the positive developments, markets remained cautious as investors assessed the US Federal Reserve’s monetary policy outlook. Federal Reserve Bank of Richmond President Thomas Barkin said inflationary pressures would take time to ease, adding that further interest rate increases might be necessary to bring inflation toward the Fed’s 2% target. Federal Reserve Bank of Boston President Susan Collins also said persistent price pressures called for a more restrictive policy stance to achieve price stability over the long term.

Domestically, Bank Indonesia’s decision to maintain its benchmark interest rate provided another source of support for the rupiah.

At its Sept. 22-23 Board of Governors Meeting, BI kept the BI-Rate unchanged at 5.75%. The Deposit Facility rate remained at 4.75%, while the Lending Facility rate stood at 6.50%.

Ibrahim said the central bank’s decision was aimed at maintaining exchange rate stability while supporting economic growth and controlling inflation.

BI also plans to strengthen measures to encourage foreign capital inflows and deepen the money and foreign exchange markets.

Looking ahead, Ibrahim expects the rupiah to remain volatile on Thursday, with the currency potentially weakening to between Rp 17,810 and Rp 17,860 per dollar.

Other currencies closed at Rp 13,949 per Singapore dollar, Rp 112.88 per Japanese yen, Rp 12,629 per Australian dollar and Rp 20,346 per euro.

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