Rupiah under pressure from Iran–Israel conflict, nearly touches Rp 17,000 per US dollar

The rupiah in the spot market weakened on Thursday (5 March 2026). The rupiah closed down 13 points, or 0.08 percent, to Rp 16,905 per US dollar. Currency and commodities analyst Ibrahim Assuaibi said the US dollar index strengthened amid rising geopolitical tensions in the Middle East and global risk sentiment. Iran launched a volley of missiles at Israel on Thursday morning. The attack forced millions to seek shelter as the conflict entered its sixth day. The incident occurred hours after an attempt to halt US airstrikes was blocked in Washington. The incident killed at least 80 people. NATO air defence systems also destroyed Iranian ballistic missiles aimed at Turkey. Iranian forces were reported to have attacked a tanker near the Strait of Hormuz. A blast occurred near a tanker off the coast of Kuwait, according to the UK Maritime Trade Operations. “The escalation occurred as the son of the Supreme Leader who had been killed emerged as a leading candidate to succeed him, showing Tehran will not bow to pressure, five days after the United States and Israel launched a military campaign that has killed hundreds of people and rocked global markets,” Ibrahim said. US President Donald Trump nominated Kevin Warsh as the next chair of the Federal Reserve. Markets saw this move as increasing the likelihood of rate cuts. China set its 2026 economic growth target at 4.5-5 percent. The target is slightly lower than last year’s 5 percent and leaves room for structural adjustment of the economy. Financial system stability was assessed as intact. Banking liquidity was adequate. Capitalisation was strong. Credit risk relatively low. The digitisation of the payments system also supported growth. Bank Indonesia expects 2026 growth to be in the range of 4.9-5.7 percent. Growth could rise in 2027 with inflation contained. External resilience remains solid. Indonesia’s balance of payments remains healthy and supported by the performance of the trade balance. End-January 2026 foreign exchange reserves stood at USD 154.6 billion. This figure equates to financing 6.3 months of imports or 6.1 months of imports and government external debt payments, above the international three-month import standard. Ibrahim expects the rupiah to move variably in coming sessions. The rupiah could close weaker around Rp 16,900 to Rp 16,940 per US dollar.