BI: US-Iran War Has Indirect Impact on Global Financial Markets

Jakarta (ANTARA) - Bank Indonesia’s (BI) Senior Deputy Governor Destry Damayanti revealed that the US-Israel war against Iran will have a very significant indirect impact on global financial markets. “As for the direct impact, Iran and Israel are actually not global financial hubs. So their contribution to the financial sector is not very large, and the market reaction in the Middle East is also relatively limited, but the indirect impact will be very large,” she said during the Central Banking Forum 2026 in Jakarta on Monday. The very significant indirect impact is due to the involvement of the US as a global financial centre. Additionally, Iran’s strategic position in the region triggers uncertainty in global financial markets, thereby increasing risk sentiment more broadly, not limited to the conflict area. This condition triggers risk-off behaviour among market participants, namely when investors tend to avoid risk and shift to seeking safer assets (safe haven activity). This phenomenon results in capital flows returning to advanced economies, reflected in the strengthening of the dollar index (DXY) and the rise in US Treasury yields reaching 4.5-4.6 per cent. Conversely, she said, capital flows to emerging markets, including Indonesia, are experiencing a decline. Although the domestic market is starting to see inflows into 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, US Treasury yields also rise, capital flows to emerging markets decline, and pressure on the exchange rates of various currencies also increases,” Destry explained.