Iran-US-Israel War Strengthens Dollar, BI Provides Explanation

The war in the Middle East between the United States and Israel against Iran has caused the US dollar exchange rate to strengthen against various global currencies, including the rupiah.

Bank Indonesia Senior Deputy Governor Destry Damayanti stated that this situation is due to the indirect impact of the conflict on global financial markets, which has heightened risk sentiment and lifted the US Dollar Index (DXY).

“A risk-off situation has occurred. This means investors are avoiding risk, leading to safe-haven activity. Inevitably, flows go to advanced economies, including the US. The DXY has increased,” said Destry at the Central Banking Forum 2026 themed ‘Indonesia’s Economic Resilience in Facing Global Exchange Rate Volatility’, in Jakarta on Monday (14/4/2026).

Destry explained that the risk sentiment prompts financial market participants to flee capital to advanced countries, including the US dollar from emerging markets, naturally strengthening non-dollar currencies.

“So, flows to emerging markets have decreased, not just in Indonesia, which has also seen reduced inflows despite some in government bonds, slightly in stocks, and Bank Indonesia securities. But overall, there was an outflow of Rp21 trillion,” Destry emphasised.

For information, the US Dollar Index (DXY), which measures the greenback’s strength against six major world currencies, was observed strengthening 0.37% to 99.010 at 09:00 WIB.

This condition caused the rupiah exchange rate to open weaker against the US dollar in this week’s first trading session on Monday (13/4/2026), in line with the strengthening of the US dollar in global markets.

Referring to Refinitiv data, the Garuda currency started trading in the red zone at Rp17,100/US, ordepreciatedby0.09.