Iran War Shifts Global Wealth: Who Laughs and Who Cries?

Military escalation involving the United States, Israel, and Iran in the Middle East on 28 February 2026 has triggered structural shifts in global capital flows, with market momentum already showing signs of fatigue in the days prior to the conflict.

Based on market movement data from 27 February to 17 March 2026, significant performance changes occurred across four key instruments closely monitored by market participants: Bitcoin, US Dollar exchange rates, gold, and the Indonesian Composite Stock Price Index (IHSG) as of 10:00 AM Western Indonesian Time.

Market movements since the outbreak of war have shown anomalies compared with historical patterns observed during past geopolitical crises.

Surge in Demand for Crypto Assets

Contrary to traditional market expectations, Bitcoin (BTC) has recorded the most solid performance during this crisis period. Trading data shows Bitcoin prices rising gradually from US$65,540.81 on 27 February 2026 to US$75,269.96 on 17 March 2026.

This appreciation of more than 14.8% indicates a shift in perspective among some investment managers and financial institutions.

In a situation where traditional financial systems are viewed as vulnerable to geopolitical disruptions and capital restriction policies, Bitcoin is increasingly being positioned as an alternative store of value. Its decentralised nature provides liquidity not tied to any single nation’s monetary authority.

Strengthening of US Dollar as Safe-Haven Asset

In foreign exchange markets, the US Dollar has consistently maintained its function as the most liquid safe-haven asset. This is directly reflected in the movement of the Rupiah exchange rate (USD/IDR).

The Rupiah depreciated measurably from Rp16,760 per US dollar to Rp16,975 per US dollar, indicating a strengthening of the Dollar index by 1.28%.

In conditions of uncertainty regarding global logistics supply chains, institutional capital flows have rationally shifted towards US Dollar-denominated cash instruments to maintain balance sheet stability, given the existing Petro-Dollar agreement whereby oil price increases will drive up the Dollar index (DXY).

Mechanical Pressure on Gold

Weakness has instead affected precious metals instruments. Gold (XAU), which historically shows positive correlation during armed conflicts, this time recorded a decline of 4.83% from US$5,277.29 to US$5,022.17 per troy ounce.

This commodity price correction was driven by two market mechanisms. Firstly, gold on 2 March 2026 surged to US$5,400 before subsequently declining to current levels.

Secondly, this initial rise can be categorised as “sell on news” given that XAU/USD price movements have been quite elevated since 2022. Although experiencing decline, it should be noted that central banks worldwide continue to accumulate physical gold reserves and circulating gold in the market continues to diminish.

Outflows of Foreign Capital Pressure IHSG

Among these four assets, the domestic equity market has borne the deepest correction burden. The IHSG fell sharply from 8,235.48 at the end of February to 7,079.48 in mid-March 2026.

This index decline of 14.03% reflects the substantial outflows of foreign capital from high-risk assets in emerging markets.

Military tensions in the Middle East have raised concerns over potential disruption of the Strait of Hormuz, which is the essential distribution route for more than 20% of the world’s oil supply.

For Indonesia’s macroeconomic structure, a surge in global energy prices risks widening the current account deficit due to inflated oil and gas import costs. The accompanying domestic inflation risk has caused domestic equity instruments to be avoided by investors temporarily.

Reports suggest that potential budget deficits exceeding 3% of GDP have become an option should warfare in the Strait of Hormuz persist, as each US$1 increase in oil prices equates to an additional budget deficit of approximately US$6–8 billion.

Global Portfolio Allocation Recalibration

The dynamics occurring in early 2026 demonstrate the ongoing process of recalibrating global-scale investment portfolio allocation. Markets are attempting to rebalance their risk profiles by distributing liquidity towards alternative assets such as cryptocurrencies and traditional US Dollar-denominated cash instruments.

Although cryptocurrencies are currently in a bear market due to the four-year cycle, this price movement is driven by rising inflows from IBIT (iShares Bitcoin Trust) in recent days since the Middle East conflict began.

Conversely, equity-based assets in Indonesia must absorb dual pressure from macro risk-aversion sentiment, energy inflation threats, and lingering negative sentiment from the MSCI downgrade in January.

Meanwhile, the hedging function of gold is still awaiting price movement for the next price discovery phase.