Bank Indonesia Explains Indirect Impact of US-Iran War on Global Financial Markets

Bank Indonesia has revealed the indirect impact of the US-Israel war against Iran on global financial markets. This must be anticipated to prevent major effects on the national economy.

Senior Deputy Governor of Bank Indonesia, Destry Damayanti, explained that the very significant indirect impact is caused by the involvement of the US as the global financial centre.

“If direct impact, Iran and Israel are actually not global financial hubs. So their contribution to the financial sector is not too large, and the market reaction in the Middle East is also relatively limited, but the indirect impact will be very large,” she stated at the Central Banking Forum 2026 in Jakarta on Monday, 13 April 2026.

Additionally, Iran’s strategic position in the region triggers uncertainty in global financial markets, thereby increasing risk sentiment on a broad scale, not limited to the conflict area.

This condition triggers risk-off behaviour among market participants, namely when investors tend to avoid risks and shift to seeking safer assets (safe haven activity).

This phenomenon causes capital flows to return to advanced economies, reflected in the strengthening of the US dollar index (DXY) and the rise in US Treasury yields reaching 4.5-4.6 percent.

Conversely, she said, capital flows to emerging markets, including Indonesia, are declining. Although there is incoming flow in the domestic market to Government Securities (SBN), the stock market, and Bank Indonesia Rupiah Securities (SRBI), overall Indonesia recorded a capital outflow of around Rp21 trillion.

“So this means there is a risk causing global uncertainty, so the DXY rises, the US Treasury yield also rises, capital flows to emerging markets decline, and pressure on the exchange rates of various currencies also increases,” Destry revealed.