Rupiah weakens as US-Iran tensions escalate

The rupiah exchange rate against the US dollar weakened by 29 points, or 0.16 per cent, at the close of trading on Monday, reaching Rp17,722 per US dollar compared to the previous close of Rp17,693 per US dollar.

Currency analyst and Director of Forexindo Berjangka, Ibrahim Assuabi, assessed that the rupiah’s depreciation was influenced by the escalating tensions between the US and Iran.

“US forces attacked two missile launchers on Larak Island, Iran, located in the Strait of Hormuz, on Sunday (30/8/2026). This is the first known attack by the United States against the Gulf nation since late July. In response, Iran attacked two US airbases in Jordan, as reported by Iranian media on Monday, citing statements from the Iranian Revolutionary Guard,” he stated in a written report in Jakarta on Monday.

Negotiations to end the conflict are reportedly reaching a deadlock, while mediators attempt to reopen the Strait of Hormuz, a route that previously handled one-fifth of the world’s oil supply before the outbreak of war in late February 2026.

Other market sentiment stemmed from a speech by Federal Reserve Chair Kevin Warsh at the Jackson Hole Symposium.

Warsh emphasised that the central bank’s primary focus remains price stability, which prompted markets to increase speculation regarding interest rate hikes at the Fed’s September meeting, as work remains to return inflation to the 2 per cent target.

“The Fed Chair also stated that it is difficult to describe current financial conditions as restrictive, noting that credit and lending markets show only slight signs of monetary policy tightening,” said Ibrahim.

The Bank Indonesia Jakarta Interbank Spot Dollar Rate (JISDOR) also weakened today to the level of Rp17,746 per US dollar from the previous level of Rp17,703 per US dollar.