Bank Indonesia Assures Readiness to Safeguard Rupiah Amid Iran-US-Israel Conflict
Bank Indonesia (BI) has stated it will continue to closely monitor financial market dynamics and respond appropriately to safeguard the stability of the rupiah exchange rate amid heightened geopolitical tensions between Iran, the United States, and Israel. Erwin Gunawan Hutapea, Head of BI’s Monetary Management and Securities Assets Department, emphasised that the central bank will remain active in the market through intervention measures to ensure the rupiah’s movement remains aligned with economic fundamentals.
These interventions will be conducted through various instruments, including non-deliverable forward (NDF) transactions in overseas markets, as well as spot transactions and domestic non-deliverable forward (DNDF) transactions in the domestic market. BI will also continue to optimise policy to enhance the effectiveness of interest rate policy transmission.
On Monday morning (2 March), the rupiah opened weaker, depreciating 42 points or 0.25% to Rp16,829 per US dollar, compared with the previous closing position of Rp16,787 per dollar.
Currency analyst Lukman Leong from Doo Financial Futures projects that the rupiah still faces potential pressure from the impact of the conflict between Iran and the United States. He estimates the rupiah’s movement will range between Rp16,750 and Rp16,900 per US dollar, consistent with the tendency of global investors to avoid risky assets and redirect funds towards instruments perceived as safer.
Tensions escalated after Saturday (28 February), when the United States and Israel launched attacks against several targets in Iran, including Tehran. The attacks reportedly caused damage and civilian casualties. Iran subsequently responded by launching missile strikes against Israeli territory and United States military facilities in the Middle East region.
Amid these conditions, Bank Indonesia has assured that it will continue to optimise monetary policy to safeguard the stability of the domestic financial market. The stock market is expected to be shadowed by risk-off sentiment, particularly following the coordinated US-Israel attacks on Iran. The Jakarta Stock Exchange’s Composite Index (IHSG) opened lower on Monday morning as Asian stock markets came under pressure from the escalating Iran-US conflict.