Anticipating Middle East Turmoil, Bank Indonesia Takes Measures to Protect Rupiah Stability

Jakarta — The escalation of conflict in the Middle East following US strikes on Iran has triggered risk-off sentiment in global financial markets. This development is also pressuring the currencies of several emerging market economies, including the rupiah.

In response to these pressures, Bank Indonesia (BI) has assured that the monetary authority continues to monitor market movements and stands ready to take anticipatory measures.

Erwin Gunawan Hutapea, Head of Bank Indonesia’s Department of Monetary Management and Securities Assets (DPMA), affirmed that the bank would respond appropriately to ensure the exchange rate moves in accordance with its fundamentals amid deteriorating global sentiment.

“Bank Indonesia will continue to closely monitor market movements and respond appropriately,” Erwin said in an official statement on Monday (2 March 2026).

To dampen volatility, Bank Indonesia remains vigilant in the market through a triple intervention strategy. This approach encompasses transactions in the spot market, Domestic Non-Deliverable Forward (DNDF) markets, and interventions in overseas markets through Non-Deliverable Forward (NDF) transactions.

Beyond foreign exchange interventions, the monetary authority will also optimise policy measures to enhance the effectiveness of interest rate transmission. These efforts are undertaken to ensure monetary policy remains effective in preserving exchange rate stability whilst supporting the momentum of national economic growth.

These stabilisation measures are considered crucial for maintaining inflation expectations, particularly from imported goods prices or imported inflation. As is commonly observed, heightened geopolitical tensions typically prompt investors to withdraw funds from risky assets and shift towards safe-haven instruments, placing depreciation pressure on the rupiah.