Rupiah Plummets to Rp 17,675 as Middle East Tensions Drive Decline

The rupiah exchange rate in the spot market weakened significantly during trading on Monday (18/5/2026). The Indonesian currency fell by 78 points, or 0.44 per cent, to the level of Rp 17,675 per US dollar.

Currency and commodity analyst Ibrahim Assuaibi noted that external factors remain the primary cause of pressure on the rupiah exchange rate. The most prominent concern is the increasing geopolitical tension in the Middle East, particularly regarding the Strait of Hormuz, which serves as a vital route for global oil trade. These events are seen as increasing global uncertainty and triggering market fears regarding the stability of global energy routes.

“The issue of the Strait of Hormuz remains a major concern. Especially following the recent summit in China, where Iran seized a Chinese vessel, which has created its own set of tensions,” he stated.

Furthermore, the ongoing Israeli military conflict is believed to be worsening the geopolitical situation, driving the strengthening of the US dollar as a global safe-haven asset. Simultaneously, global crude oil prices are expected to continue rising, adding pressure to the Indonesian economy, which remains dependent on energy imports. An increase in oil prices will directly impact Indonesia’s import requirements.

“Crude oil prices will also continue to rise, impacting the domestic economy, particularly regarding import issues; as I have always said, the volume of oil imports is massive,” he explained.

In addition to energy import needs, pressure on the rupiah is also stemming from corporate dividend payments and the maturity of foreign debts that require foreign exchange. At the same time, there are indications that some members of the public are beginning to shift their savings from the rupiah into foreign currencies.