Rupiah Weakens Amid US Decision to Send Troops to Middle East

Jakarta (ANTARA) - The rupiah exchange rate closed weaker by 75 points at Rp16,979 per US dollar from the previous close at Rp16,904 per US dollar.

Currency analyst Ibrahim Assuabi assessed that the rupiah’s weakening aligns with the US decision to send troops to the Middle East.

“Although Trump announced a halt to attacks on Iran’s energy infrastructure, the US has also sent troops to the Middle East, with Trump considering the use of ground forces to seize Iran’s strategic oil centre on Kharg Island,” he stated in a written comment in Jakarta on Friday.

He explained that the war between the US and Iran has reduced global oil supplies by 11 million barrels per day.

The International Energy Agency described the crisis as worse than the two oil shocks of the 1970s and the Russia-Ukraine gas war combined.

In addition, markets are anticipating a high-inflation scenario.

“At the beginning of the year, traders expected at least two interest rate cuts from the Federal Reserve (Fed). However, since the conflict began and following the Fed’s policy decision on 18 March, they have reduced their dovish bets,” said Ibrahim.

The Jakarta Interbank Spot Dollar Rate (JISDOR) from Bank Indonesia today instead moved weaker to Rp16,957 per US dollar from the previous Rp16,903 per US dollar.