Middle East Conflict Presses Rupiah Toward Rp 17,000 per U.S. dollar
Jakarta – The rupiah’s exchange rate against the U.S. dollar continued its weakness amid ongoing geopolitical tensions in the Middle East. It is forecast that the Indonesian currency will remain soft and approach the Rp 17,000 per dollar level.
According to Bloomberg, the rupiah closed down 20 points, or 0.12 percent, at Rp 16,892 per U.S. dollar at the close of trading on Wednesday, 4 March 2026. In the previous session, the rupiah stood at Rp 16,872 per U.S. dollar.
Currency and commodities analyst Ibrahim Assuaibi explained that the high level of geopolitical tension in the Middle East is an external sentiment pressuring the rupiah.
“Traders are weighing supply risks amid the expanding Middle East conflict, which began over the weekend when U.S. and Israeli forces launched coordinated strikes against Iran’s military that killed the Supreme Leader Ayatollah Ali Khamenei,” Ibrahim said in a statement on Wednesday, 4 March 2026.
He noted that the situation worsened when Israeli and U.S. forces carried out further attacks on facilities associated with Iran on Tuesday. Iran responded by intensifying military deployments in the Gulf and issuing warnings to global shipping operators.
Tehran also targeted oil tankers transiting the Strait of Hormuz, the narrow waterway that handles about a fifth of global oil shipments. Iranian authorities vowed to strike any vessel passing through the strait.
“Threats to Hormuz, a key route for crude oil exports from major producers including Saudi Arabia, Iraq, and the United Arab Emirates, have injected a significant geopolitical risk premium into oil prices. They noted reports that Iraq has begun halting production at Rumaila, the country’s largest field, and at West Qurna 2, with 1.2 million barrels per day of production halted,” he said.
As for U.S. President Donald Trump, he said the U.S. Navy will provide escort for commercial ships if necessary and pledged government backing to ensure safe shipping lanes. While the military escalation has supported prices, signs of international efforts to secure shipping routes could dampen further increases in the near term.