Rupiah Exchange Rate Today Declines Impacted by US Plan to Send Ground Troops to Iran

The rupiah exchange rate closed weaker by 75 points at Rp16,979 per US dollar from the previous close of Rp16,904 per US dollar. Currency analyst Ibrahim Assuabi assessed the rupiah’s weakening in line with the US decision to send troops to the Middle East. “Although Trump announced the cessation of attacks on Iran’s energy infrastructure, the US has also sent troops to the Middle East, with Trump considering the use of ground forces to seize Iran’s strategic oil centre on Kharg Island,” he stated in a written remark in Jakarta on Friday (27/3). He explained that the war between the US and Iran has reduced global oil supplies by 11 million barrels per day. The International Energy Agency described the crisis as worse than the two oil shocks of the 1970s combined with the Russia-Ukraine gas war. Additionally, the market anticipates a high-inflation scenario. “At the start of the year, traders expected at least two rate cuts from the Federal Reserve (Fed). However, since the conflict began and after the Fed’s policy decision on 18 March, they have reduced their dovish bets,” said Ibrahim. The Jakarta Interbank Spot Dollar Rate (JISDOR) from Bank Indonesia today instead weakened to Rp16,957 per US dollar from the previous Rp16,903 per US dollar. He elaborated that the depreciation of the rupiah against the US dollar since the Israel-US versus Iran war has been recorded at 0.3%. The risk-off stance of investors is due to the escalation of conflict in the Middle East region, as well as high US Treasury yields due to expectations of sustained high interest rates from the Fed.