Rupiah closes weaker on Monday evening at Rp16,949 per US dollar
Jakarta — The rupiah closed weaker against the US dollar in Monday afternoon trading amid mounting external pressure resulting from surging global oil prices and escalating geopolitical conflict in the Middle East.
The rupiah weakened by 24 points to Rp16,949 per US dollar compared to the previous close of Rp16,925 per US dollar. During trading, the rupiah even weakened by up to 70 points.
According to a statement in Jakarta on Monday, money market observer Ibrahim Assuaibi stated that the rupiah’s weakness was triggered by external and internal sentiment, particularly the surge in global oil prices which have now reached approximately USD 92 per barrel, the highest level since 2020.
This price far exceeds the macroeconomic assumption in the 2026 state budget which set oil prices at around USD 70 per barrel. This condition has the potential to increase the state budget deficit by up to Rp6.8 trillion.
The surge in oil prices has been driven by geopolitical tensions in the Middle East, particularly following air strikes by Israel and the United States targeting Iranian oil facilities. Tehran subsequently retaliated by launching missile strikes against several oil facilities in the region.
From an external perspective, the situation has intensified following reports that Iran has attacked ships in the Strait of Hormuz shipping lane, a strategic corridor through which approximately 20 per cent of global oil supplies flow. The potential for disruption to this route has heightened market concerns regarding global energy supplies.
Sentiment from Asia has also influenced market movements. China’s consumer price index (CPI) inflation increased by 1.3 per cent year-on-year in February, higher than market expectations of 0.9 per cent and representing the fastest rate in the past three years.
Ibrahim attributed the inflation increase primarily to surging consumption during the Chinese New Year holiday period, when demand for travel, services, and discretionary goods increased sharply.
Amid these pressures, he believes the government needs to take several strategic measures to maintain domestic economic stability. First, the government must implement significant budget efficiency by focusing expenditure on basic public needs. “Government spending should focus solely on basic people’s needs such as education, health, food, energy, and poverty alleviation,” Ibrahim stated.
Third, economic stimulus also needs to be strengthened through deregulation to encourage business activity, including removing rules that hinder economic growth and simplifying bureaucracy. “Similarly, there is a need for debureaucratisation, as convoluted bureaucracy that hampers business activity can be streamlined,” he added.
Given these factors, for Tuesday’s trading (10 March), Ibrahim estimates the rupiah’s movement will remain volatile but has the potential to close weaker in the range of Rp16,950 to Rp17,000 per US dollar.