Rupiah Weakens, Nearing 18,000 Level as Middle East Geopolitics Take Spotlight

The rupiah exchange rate weakened by 4 points, or 0.02 percent, to Rp 17,984 per US dollar on Wednesday morning, compared to the previous close of Rp 17,980 per US dollar. Doo Financial Futures analyst Lukman Leong estimated that the escalation of geopolitical tensions in the Middle East could put pressure on the rupiah. “The major US strike on Iran is retaliation for attacks on commercial ships in the Strait of Hormuz,” he said in Jakarta on Wednesday (8/7/2026). Citing Sputnik, the United States launched a series of new strikes on Iran. US Central Command (CENTCOM) stated the operation was a response to Iranian attacks on three commercial vessels in the Strait of Hormuz. On Tuesday (7/7/2026), Iranian national media IRIB reported that a Qatari vessel, Al-Rekayyat, attempted to transit the Strait of Hormuz via the Omani route with US Navy support. However, the vessel was targeted after several warnings were issued. Another sentiment came from the increase in Indonesia’s foreign exchange reserves. Bank Indonesia (BI) reported that the country’s foreign exchange reserves at the end of June 2026 stood at 145.6 billion US dollars, an increase of 700 million US dollars from the end of May 2026 position of 144.9 billion US dollars. This development was mainly driven by tax and service revenues. The increase in foreign exchange reserves occurred amidst government external debt payments and BI’s rupiah stabilisation policy in response to high global financial market uncertainty. The end-June 2026 reserve position is equivalent to financing 5.5 months of imports, or 5.4 months of imports and government external debt payments, and is well above the international adequacy standard of around three months of imports. However, Lukman noted that investors are also anticipating the consumer confidence index later today, which is expected to rise to 125. Based on these factors, the rupiah is predicted to move within a range of Rp 17,950 to Rp 18,050 per US dollar.