Iran-Israel Ceasefire Lifts Indonesian Stock Market, Currency Hopes

TEMPO.CO, Jakarta - The ceasefire between Iran and Israel has been rocky, with U.S. President Donald Trump accusing both nations of violating the agreement. Still, the truce has fueled positive sentiment in Indonesia's stock and financial markets. 

After Trump's ceasefire announcement on June 24, the Indonesia Stock Exchange (IDX) saw its Composite Stock Price Index (IHSG) closing 1.21% higher at 6,869.17. The LQ45 index rose 1.40 percent to 764.41, while Ten IDX-IC sectoral indices gained, led by property (up 3.2 percent), non-primary consumer goods (3.18 percent), and healthcare (2.27 percent). The energy sector fell 0.51 percent. Trading recorded 1.22 million transactions, with 20.83 billion shares worth Rp11.94 trillion traded. Of these, 453 shares rose, 165 fell, and 181 were unchanged. 

"IHSG and Asian markets rallied on hopes of de-escalating Middle East tensions, easing global risk concerns," said Maximilianus Nico Demus of Pilarmas Investindo Sekuritas, quoted by Antara on June 24.

On Monday, June 23, the IHSG dropped 1.74 percent to 6,787.14, and LQ45 fell 1.45 percent to 753.83, as markets monitored rising Middle East tensions. "The IHSG weakened due to fears of geopolitical risks and rising oil prices impacting the economy amid declining purchasing power and tariff wars," Phintraco Sekuritas analyst Ratna Lim said.

Mirae Asset Sekuritas' Nafan Aji Gusta noted Brent oil prices fell below US$70 amid ceasefire news and the opening of the Hormuz Strait. "This sentiment has pushed IHSG into positive territory," he said.    

The rupiah gained 139 points or 0.84 percent on Tuesday, June 24, to close at Rp16,354 per U.S. dollar, with Bank Indonesia's JISDOR rate rising from 16,484 to 16,370. Laba Forexindo Berjangka director Ibrahim Assuabi attributed the rupiah's rise to Middle East peace hopes and Federal Reserve official Michelle Bowman's hint at a potential July 2025 rate cut. 

On June 17, Finance Minister Sri Mulyani Indrawati warned that the Iran-Israel conflict requires Indonesia to be aware of the effects of rising prices, inflation, and yields due to soaring oil prices and the United States' expansionary fiscal policy, which risks raising the yield on U.S. treasury bonds.

Paramadina University economist Wijayanto Samirin said that since the conflict began on June 13, IHSG has been corrected by 3.4 percent, in line with global indices. With de-escalation signs, he expects IHSG to rebound and pressure on the rupiah to ease, though risks remain. 

Andalas University economist Syafruddin Karimi warned that Iran's potential closure of the Hormuz Strait, handling 20 percent of global oil traffic, could sharply impact the IHSG short term. Iran's parliament has approved the closure, but its Supreme National Security Council has not finalized the decision. 

Syafruddin urged swift government action to stabilize markets with credible policies. Bank Indonesia must ensure exchange rate and liquidity stability, while the Finance Ministry should control energy subsidies to avoid fiscal uncertainty. 

Despite a weakening US dollar trend, geopolitical tensions boost its safe-haven appeal, shifting markets to dollar-based assets during conflicts. A Hormuz closure could spike oil prices, widening Indonesia's current account deficit via higher energy import costs. 

"This creates dual pressure on the rupiah: capital flows and trade balance," Syafruddin said.   

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