Geopolitical Tensions Rise, Rupiah Weakens

The rupiah exchange rate on Thursday morning weakened by 52 points, or 0.29 percent, to Rp 18,066 per US dollar compared to the previous close of Rp 18,014 per US dollar. Permata Bank Chief Economist Josua Pardede stated that the rupiah’s depreciation was influenced by escalating geopolitical tensions in the Middle East. The weakening of the rupiah occurred alongside most Asian currencies as rising geopolitical tensions in the Middle East suppressed risk sentiment in the region. The escalation in conflict refers to a US military strike against Iran, which dimmed hopes for a near-term peace deal in the area. The continued escalation is causing greater shipping disruptions in the Strait of Hormuz, triggering concerns over supply disturbances from the Middle East. The strike also occurred shortly after the US withdrew a key concession that allowed Iran to sell oil internationally, a move that signals tighter oil markets in the coming weeks. Crude oil prices also rose past US$75 per barrel, adding pressure to emerging market currencies. Another sentiment came from the release of the Federal Open Market Committee (FOMC) minutes for June 2026, which confirmed policymakers’ concerns about persistent inflationary pressures. Based on these factors, the rupiah is expected to trade within the range of Rp 17,975 to Rp 18,125 per US dollar.