Iran-Israel War Uncertainty Pressures Rupiah to 16,970

The rupiah weakened by 12 points, or 0.07 per cent, to 16,970 per US dollar at the opening of trading in Jakarta on Monday, 16 March 2026, compared with the previous close of 16,958 per dollar.

According to Josua Pardede, Chief Economist at Permata Bank, ongoing uncertainty surrounding the Middle East conflict and the Iran-Israel war was weighing on risk sentiment in markets. “The continuing uncertainty related to the Middle East conflict is putting pressure on market risk sentiment, which is affecting the rupiah’s movements,” he said.

Geopolitical tensions in the region have escalated following statements from the US Government that the scale of attacks against Iran has been raised beyond previous expectations. The Pentagon has reportedly deployed a marine expeditionary unit to the region.

As tensions mounted, crude oil prices surged, further strengthening the US dollar. On Friday, 13 March, Brent crude oil rose 2.67 per cent to $103.14 per barrel.

However, the US dollar’s gains were temporarily restrained following the release of US gross domestic product data for the fourth quarter of 2025. Figures were surprisingly revised downwards to 0.7 per cent quarter-on-quarter from a previous estimate of 1.4 per cent quarter-on-quarter, reflecting signs of weakening conditions in the US economy.

Meanwhile, the Federal Reserve’s preferred inflation gauge, the PCE Price Index, declined slightly to 2.8 per cent year-on-year in January 2026 from 2.9 per cent year-on-year in the previous month. The Core PCE Price Index, however, edged up to 3.1 per cent year-on-year from 3.0 per cent.

Josua predicted that the rupiah would trade within a range of 16,900–17,050 per US dollar during today’s session, given the absence of any indication that geopolitical tensions would ease and as investors adopted a wait-and-see approach ahead of Indonesia’s extended holiday period beginning on Wednesday this week.