Iran-US Conflict Causes Rupiah to Plunge Further

JAKARTA, KOMPAS.com - The rupiah exchange rate is said to have the potential to continue weakening until it breaches the Rp18,000 to Rp20,000 level per US dollar if the geopolitical conflict in the Middle East intensifies further.

Currency and Commodities Analyst Ibrahim Assuaibi assesses that the current pressure on the rupiah is largely influenced by global factors.

One of the triggers is the surge in global oil prices due to tensions between Iran and the US in the Strait of Hormuz and the Gulf of Oman.

“Certainly, global factors are influencing it. One of them is the unrest in the Middle East, particularly in the Strait of Hormuz between Iran and America,” said Ibrahim when contacted by Kompas.com on Thursday (7/5/2026).

That situation is disrupting global energy trade routes and pushing crude oil prices to soar sharply.

The rise in oil prices directly impacts the strengthening of the US dollar and increases global inflation pressures.

As a result, the currencies of emerging countries, including the rupiah, are also under pressure.

Indonesia is considered one of the countries vulnerable to rising oil prices due to its substantial dependence on energy imports.

Ibrahim notes that Indonesia’s energy needs reach around 2.1 million barrels per day.

Meanwhile, domestic oil production is only about 600,000 barrels per day.

That condition means Indonesia still has to import around 1.5 million barrels of oil every day.

“Why is it experiencing weakening? Because Indonesia imports 1.5 million barrels of oil per day. So, the total energy needs in Indonesia are 2.1 million barrels. Indonesia only produces 600,000 barrels per day,” he explained.

In the state budget, the oil price is pegged at around 70 US dollars per barrel with the assumption of a rupiah exchange rate at Rp16,500 per US dollar.

Meanwhile, the current global oil price is said to be in the range of 116 to 120 US dollars per barrel.

The rupiah exchange rate is also approaching Rp17,400 per US dollar.

“Thus, the government is facing a shortfall. With this budget shortfall, it causes problems with the current account balance and results in a budget deficit,” Ibrahim continued.

According to him, the market is starting to worry that Indonesia’s state budget deficit is approaching the 3 percent limit against gross domestic product (GDP).

“The fear of the budget deficit approaching 3 percent is what ultimately causes the rupiah to weaken,” he said.