Rupiah weakens as Middle East escalation heats up

Jakarta (ANTARA) - The rupiah exchange rate against the US dollar moved lower on Tuesday morning, weakening by 11 points or 0.07 percent to Rp17,405 per US dollar from the previous close at Rp17,394 per US dollar. Currency analyst at Doo Financial Futures, Lukman Leong, stated that the rupiah’s weakening was triggered by the escalating tensions in the Middle East (Timteng) that are intensifying. “The rupiah has the potential to weaken further against the strengthening US dollar, responding to the escalation in the Middle East,” he told ANTARA in Jakarta on Tuesday. A report mentioned that the United Arab Emirates (UAE) was attacked by Iran. The Emirati government press service in Fujairah reported a fire in one of the oil zones following a drone attack, raising concerns over regional escalation, as reported by Sputnik. However, a senior Iranian military source stated that they have never and currently have no plans to attack the UAE. In addition, the US is said to have sunk several Iranian vessels as US President Donald Trump announced Project Freedom, an operation to assist vessels impeded in the Strait of Hormuz that wish to leave the area. CENTCOM stated that military support for the operation includes guided-missile destroyers, more than 100 land- and sea-based aircraft, multi-domain unmanned systems, and 15,000 military personnel. The operation began on Monday (4/5). Meanwhile, Iranian media IRIB reported that the Iranian military prevented US vessels from passing through those waters by firing two missiles towards one US warship. “The weakening is expected to be limited, with investors awaiting Indonesia’s Q1 GDP (Gross Domestic Product for the first quarter of 2026) data, which will be released this afternoon,” he said. Based on these factors, the rupiah is predicted to range between Rp17,350-Rp17,450 per US dollar.