BI Governor Explains Reasons for US Dollar's Strength Breaching Rp17,000

Jakarta, CNBC Indonesia - Bank Indonesia Governor Perry Warjiyo has revealed a series of factors causing the US dollar to continue strengthening, to the point of pressuring the rupiah exchange rate to breach Rp17,000/US$. He stated that this situation is inseparable from the turmoil in financial markets since the United States and Israel began striking Iran from late February 2026 until now. The war between the countries has caused global crude oil prices to explode, disrupting world trade and foreign capital flows. “There has been a strengthening of the US dollar, which is evident there,” said Perry during a working meeting with Commission XI of the DPR in Jakarta on Wednesday (8/4/2026). Perry explained that the series of US dollar strengthenings initially occurred due to negative sentiment among financial market players towards the skyrocketing global crude oil prices. This is because the war has also disrupted the main global energy trade route, namely the Strait of Hormuz. “Oil prices that have rocketed since February to March, even reaching US$122.95 yesterday, and they continue to fluctuate up and down, as well as gold prices increasing during 2025 and still high, that is the first impact," Perry emphasised. Next, the interest rates or yields on US government securities, namely US Treasuries with 2-year and 10-year tenors, have increased rapidly. In fact, last year, both tenors were experiencing a downward trend. "For the 2-year tenor, it dropped quickly last year, and the 10-year also, though not as quickly. But because of the war, both have increased rapidly due to the rise in the US fiscal deficit for war budgeting. It's evident there, which has an impact on Indonesia," he explained. The issues of oil prices and US government bond yields certainly, he said, have a direct impact on the subsequent ripple effect, namely the massive outflow of foreign capital from developing countries, including Indonesia, to the US. As a result, the dollar becomes even stronger. "Portfolio inflows last year had an upward trend despite volatility. But since this year, there has been a large outflow from emerging markets, both in the form of bonds, stocks, and others," said Perry. Nevertheless, it is important to note that today, the rupiah currency opened trading with a strengthening against the US dollar. Citing Refinitiv data, at the opening of trading on Wednesday (8/4/2026), the rupiah opened stronger at Rp16,970/US$ or appreciated by 0.70%. This strengthening occurred after the previous trading session on Tuesday (7/4/2026), when the rupiah closed sharply weaker at Rp17,090/US$. On the other hand, the US dollar index (DXY) at 09:00 WIB was monitored in the red zone with a 0.94% weakening to 98.918.