Rupiah Persists Above Rp 18,000 per US Dollar for a Week
The rupiah exchange rate against the US dollar has persisted above the Rp 18,000 level over the past week. The currency’s fluctuation comes amid a renewed escalation of the conflict in the Middle East between the United States and Iran, following a period of ‘illusory peace’.
The rupiah breached the Rp 18,000 mark on Wednesday (8/7/2026), precisely at Rp 18,005 per US dollar. This depreciation occurred in the wake of a US military strike on Iran, which was a response to Iranian attacks on three US commercial vessels transiting the Strait of Hormuz.
A week later, on Wednesday (15/7/2026), the rupiah remained above this psychological threshold. Quoting Bloomberg, the Garuda currency strengthened by 23 points, or 0.13 percent, to Rp 18,068 per US dollar.
Currency and Commodities Observer Ibrahim Assuaibi stated that several sentiments, both external and internal, are influencing the rupiah’s fluctuations.
Externally, the dynamics of the geopolitical conflict in the Middle East remain the strongest sentiment. US President Donald Trump reportedly re-imposed a naval blockade on all Iranian ports. Meanwhile, Iran launched retaliatory strikes against US infrastructure in the region.
Tehran declared it was again closing the Strait of Hormuz after hostilities with the US reignited last week. This situation further undermines the ceasefire reached in June 2026 after several months of fighting.
The Iranian military stated on Wednesday morning that it had launched a drone strike against US positions at Azraq Base in Jordan. There has been no official comment from the Pentagon. Iran’s Islamic Revolutionary Guard Corps was also reported to have targeted weapons and storage facilities in Bahrain and Kuwait.
‘The rise in tensions in recent days has increased doubts that the memorandum of understanding signed last month will lead to a permanent end to the war that has plagued Iran’s neighbouring countries,’ Ibrahim said.
Beyond geopolitical sentiment, US economic data and interest rate policy expectations are also factors influencing exchange rate movements. The US Consumer Price Index (CPI) for July 2026 was recorded as having fallen from 4.2 percent to 3.5 percent year-on-year (yoy), lower than the forecast of 3.8 percent.
‘This is an indication that an aggressive interest rate hike by the Fed is not currently necessary,’ he stated.
Meanwhile, core inflation fell from 2.9 percent to 2.6 percent. This figure was also lower than the estimate of 2.8 percent.
‘Market participants are reducing bets on a Fed rate hike. According to the CME FedWatch Tool, the probability of a rate hike in July fell to 16 percent from 40 percent, while the chance of a rate hike in September dropped to 60 percent from 74 percent,’ he explained.