Rupiah weakens as US-Iran conflict escalates

The rupiah exchange rate weakened by 56 points, or 0.31 percent, to Rp17,977 per US dollar on Monday morning, compared to the previous close of Rp17,921 per US dollar. Analyst Rully Nova from Bank Woori Saudara stated that the rupiah’s depreciation was linked to the escalating geopolitical conflict between the United States and Iran. “The rupiah is expected to trade in the range of Rp17,900 to Rp18,000 today, influenced by global factors, namely the escalation of geopolitical conflict which has resulted in rising oil prices and a strengthening dollar index,” he said in Jakarta on Monday. Citing Sputnik, US Central Command (CENTCOM) announced the commencement of a new series of strikes against Iran. According to an Anadolu report, Iran retaliated by launching a large-scale drone attack on two US military installations in Kuwait. The Iranian military stated it had struck an ammunition depot at Camp Al Adiri, as well as Patriot missile systems and air defence radar installations at Ali Al Salem Air Base. On the domestic front, market participants expect Bank Indonesia to raise its benchmark interest rate to 6 percent at the Board of Governors meeting on Wednesday (22/7) as a pre-emptive measure against inflation. “The main reasons for the rate hike include inflation, the rupiah exchange rate, and stock market volatility, coinciding with reviews by global rating agencies,” Rully said.