Rupiah weakens amid risk of open conflict between the US, Israel and Iran

Jakarta (ANTARA) – The rupiah closed trading in Jakarta on Thursday weaker by 13 points or 0.08 percent to Rp16,905 per US dollar from the previous close of Rp16,892 per US dollar.

Rully Nova, an analyst at Bank Woori Saudara, said the rupiah’s depreciation was influenced by the rising dollar index, which continues to approach 100 and is affected by the risk of open conflict between the US-Israel and Iran.

According to Sputnik, Iran stated it did not intend to negotiate with the US and would carry on hostility between them. Mohammad Mokhber, a aide to the late Supreme Leader Ayatollah Ali Khamenei, on Wednesday (4 March), stressed that Iran does not trust the US.

According to Mokhber, Iran is capable of continuing the war because it has eight years’ experience, referring to the Iran-Iraq War (1980-1988).

Earlier, the Islamic Revolutionary Guard Corps (IRGC) pledged not to let the attack launched by the US and Israel on Saturday go unchallenged. The attack targeted several targets in Iran, including in Tehran, with reports of damage and civilian casualties. Iranian state television confirmed that Supreme Leader Ayatollah Ali Khamenei had died in the strike.

Iran then launched a retaliatory missile attack on Israeli territory and US military facilities in the Middle East. The IRGC stated that the US-Israel attack targeted schools, hospitals, stadiums, restaurants, and wedding halls to create panic among Iranian society. They stated that civilian casualties had surpassed 700.

Domestically, Fitch’s outlook downgrade added to market fears. However, investor demand for government bonds rose, especially for short- to medium-term maturities, tempering rupiah’s depreciation further.

“The biggest gains were in the 7-year tenor with yields down 4.4 basis points, followed by the 8-year down 4.1 bps, 9-year down 3.1 bps, and 10-year down 2.1 bps,” said Rully.

“Government bonds still offer relatively attractive yields and their liquidity remains high,” he said.

Meanwhile, Bank Indonesia’s Jakarta Interbank Spot Dollar Rate (JISDOR) also moved higher to Rp16,886 per US dollar from Rp16,911 per US dollar.