Rupiah under pressure from Middle East geopolitical escalation

The rupiah exchange rate weakened by 4 points, or 0.02 percent, to Rp17,984 per US dollar on Wednesday morning, compared to the previous close of Rp17,980 per US dollar.

Doo Financial Futures analyst Lukman Leong said the rupiah could be pressured by the geopolitical escalation in the Middle East. "A major US strike on Iran in retaliation for attacks on commercial ships in the Strait of Hormuz," he said in Jakarta on Wednesday.

Citing Sputnik, the United States launched a series of new strikes on Iran, with US Central Command (CENTCOM) stating the operation was a response to Iranian attacks on three commercial vessels in the Strait of Hormuz. On Tuesday (7/7), Iranian national media IRIB reported that a Qatari vessel, Al-Rekayyat, attempted to pass through the Strait of Hormuz via the Omani route with US Navy support but was targeted after several warnings were issued.

Another sentiment came from Indonesia’s rising foreign exchange reserves. Bank Indonesia (BI) reported that the country’s reserve position at the end of June 2026 reached 145.6 billion US dollars, a slight increase of 700 million US dollars from the end of May 2026 position of 144.9 billion US dollars. The increase in reserves during June 2026 was mainly driven by tax and service revenues.

This development occurred alongside government external debt payments and BI’s rupiah stabilisation policy in response to heightened global financial market uncertainty. The reserve position at the end of June 2026 was equivalent to financing 5.5 months of imports, or 5.4 months of imports and government external debt payments, and remains above the international adequacy standard of around three months of imports.

However, Lukman noted that investors are still anticipating the consumer confidence index later today, which is expected to rise to 125. Based on these factors, the rupiah is predicted to trade in the range of Rp17,950 to Rp18,050 per US dollar.