Jakarta. Rupiah strengthened sharply on Thursday as global markets closely tracked geopolitical tensions and shifting US monetary policy expectations.

The Indonesian currency closed 41 points stronger against the US dollar at Rp 16,759 in the afternoon session, compared with the previous close of Rp 16,800. Earlier in the day, the rupiah had appreciated by as much as 50 points.

Ibrahim Assuaibi, director of Traze Andalan Futures, said the rupiah’s gains came despite lingering external pressures, with markets focusing on escalating tensions between the United States and Iran in the Middle East.

“Markets are closely monitoring diplomatic developments as US and Iranian officials prepare to meet in Geneva to revisit Tehran’s nuclear program,” Ibrahim said in a written statement on Thursday.

Iran’s Foreign Minister Abbas Araqchi recently signaled that a diplomatic resolution remains possible if both sides commit to constructive engagement. Meanwhile, US President Donald Trump warned that negative outcomes could arise if dialogue fails to make progress.

The rupiah also strengthened even as investors remained cautious following the US Supreme Court’s decision to overturn Trump’s trade tariff policy.

“Markets are assessing the impact of newly announced US tariffs after the Supreme Court ruling altered the legal framework for several trade measures. The introduction of new global import duties of up to 15% has added uncertainty to the global trade outlook,” Ibrahim said.

In addition, expectations for an imminent Federal Reserve rate cut have eased, as policymakers continue to flag persistent inflationary pressures.

Chicago Fed President Austin Goolsbee said he remains cautious about cutting interest rates without clear evidence that inflation is sustainably returning to the central bank’s 2% target.