Rupiah weakens as ongoing uncertainty in the Middle East persists

At the opening of trading in Jakarta on Thursday, the rupiah weakened by 4 points or 0.02 percent to Rp16,896 per US dollar from the previous close of Rp16,892 per dollar. Josua Pardede, Chief Economist at Permata Bank, said the rupiah’s weakness was influenced by ongoing uncertainty in the Middle East. ‘Rising tensions, with no indication of compromise among the parties involved, weigh on market sentiment and dampen investors’ risk appetite,’ he told ANTARA in Jakarta on Thursday. Earlier, unfounded reports suggested that Iran had approached the US to explore potential peace negotiations. The news revived investors’ risk appetite and boosted demand for high-risk assets. However, Iranian authorities denied the report. In addition, Fitch announced a revision of Indonesia’s sovereign rating outlook to negative from stable, while affirming the rating at BBB. The downgrade of the outlook reflects concerns about the sustainability of the domestic fiscal position, particularly the rising pressure on government spending without a commensurate rise in revenue. ‘This move echoes Moody’s earlier warning signals,’ he said. Looking at global sentiment, the S&P Global US Services PMI fell to 51.7 in February 2026 from 52.3 previously, below the market expectation of 52.3. By contrast, the ISM Services Index unexpectedly rose to 56.1 from 53.8, surpassing the consensus estimate of 53.5. Meanwhile, US labour market data showed improvement, with ADP Employment Change rising to 63 thousand in February 2026 from 11 thousand previously, and beating the 50 thousand expectation. ‘With this backdrop, the rupiah is projected to trade in a range of Rp16,850–Rp16,975 in today’s trading session,’ said Josua.