Rupiah weakens as Middle East geopolitical tensions escalate

The rupiah exchange rate weakened by 52 points, or 0.29 percent, to Rp18,066 per US dollar on Thursday morning, compared to the previous close of Rp18,014 per US dollar. Permata Bank Chief Economist Josua Pardede stated that the depreciation was influenced by increasing geopolitical tensions in the Middle East. “The rupiah weakened along with the majority of Asian currencies as rising geopolitical tensions in the Middle East suppressed risk sentiment in the region,” he said. The escalation refers to US military strikes against Iran, which have dimmed hopes for a near-term peace agreement in the region. The ongoing escalation is raising concerns about shipping disruptions in the Strait of Hormuz, sparking fears of supply disturbances in the Middle East. The attacks also occurred shortly after the US withdrew a key concession that allowed Iran to sell oil internationally, a move signalling tighter oil markets in the coming weeks. Crude oil prices subsequently rose past 75 US dollars per barrel, adding pressure on emerging market currencies. Additional sentiment came from the release of the Federal Open Market Committee (FOMC) minutes for June 2026, which confirmed policymakers’ concerns about persistent inflationary pressures. Based on these factors, the rupiah is expected to trade in the range of Rp17,975 to Rp18,125 per US dollar.