Analysts Reveal Two Factors Driving US Dollar Strength, Triggering Rupiah Collapse to 17,300 Level
The currency of Uncle Sam, the US dollar, was observed to be strong in trading on Wednesday, 29 April 2026. Meanwhile, the rupiah exchange rate fell to breach the 17,300 level.
Based on VIVA’s monitoring, the rupiah exchange rate weakened by 0.48% to Rp17,326 against the US dollar by the close of Wednesday afternoon trading. The dollar also strengthened against several other countries’ currencies.
The euro was recorded weakening by 0.07% to US$1.1705. Then, the pound sterling fell 0.05% to US$1.3513.
The US dollar’s strength is accompanied by increasing market uncertainty ahead of the Federal Reserve’s (The Fed) interest rate decision. Market participants expect The Fed to hold interest rates steady, so investor focus is now on the central bank’s views regarding the impact of the Iran war on the global economy and the direction of future policies.
Currency analyst from Commonwealth Bank of Australia, Carol Kong, highlighted uncertainty related to Federal Reserve Chair Jerome Powell’s position. According to her, Powell is likely to remain in the top ranks of the US central bank even after his term as Fed Chair ends on 15 May 2026.
“The question is what Powell will do, because he still holds the position of governor until 2028. Will he step down after his term as chair ends or stay on as governor,” Kong said, quoted from Reuters on Wednesday, 29 April 2026.
She added that Powell’s decision heavily depends on his perception of the central bank’s independence. She mentioned that Powell’s statements indicate he will stay if he feels The Fed’s independence is threatened.
Another driving factor boosting the US dollar’s strength is that geopolitical tensions remain a major factor driving the dollar’s appreciation. Efforts to negotiate between the US and Iran have not yet found common ground.
US President Donald Trump is reported to have rejected Tehran’s latest proposal because he wants the nuclear issue resolved from the outset. This situation is pushing global oil prices to continue rising. Oil prices have been recorded rising for eight consecutive days, the longest streak since May 2022. Crude oil contracts have even breached the US$110 per barrel level again.
Head of Global Markets EMEA Research at MUFG, Derek Halpenny, assessed that the surge in energy prices could worsen global economic conditions. According to him, global oil prices trading back above US$110 per barrel with increasingly heavy economic impacts, especially during the summer season.