Rupiah Weakens on Monday as Global Oil Price Surge Triggers Risk-Off Sentiment
The Indonesian rupiah weakened against the US dollar at the start of trading on Monday, 9 March, as heightened risk-averse sentiment swept global markets triggered by a surge in global oil prices.
During trading in Jakarta, the rupiah dropped 76 points, or 0.45 per cent, to reach Rp17,001 per US dollar.
According to currency analyst Lukman Leong from Doo Financial Futures, pressure on the rupiah was driven by market concerns about the sharp increase in crude oil prices, which threaten to undermine global economic growth and accelerate inflation.
“The rupiah is expected to weaken against the US dollar due to deteriorating risk-off sentiment triggered by crude oil prices surpassing USD 100 per barrel, which is feared to have significant impacts on global economic growth and inflation,” Lukman told ANTARA in Jakarta on Monday.
He estimated the rupiah’s movement range for the day would be between Rp16,900 and Rp17,050 per US dollar.
The oil price surge has occurred amid escalating geopolitical tensions in the Middle East. Conflicts between the United States and Israel with Iran have expanded across multiple regions, fuelling concerns about disruptions to global energy supplies.
Uncertainty has intensified following the appointment of Mojtaba Khamenei as Iran’s new supreme leader, replacing his father Ayatollah Ali Khamenei, who has been reported dead.
The appointment of this figure, known for his close ties to hardline factions, has strengthened market perception that Iran is unlikely to soften its stance against the US and Israel in the near term.
The conflict escalation has also impacted the strategic Strait of Hormuz energy shipping corridor, triggering the global oil price surge.
At 07:50 Western Indonesia Time, WTI crude oil prices had jumped 20.81 per cent to USD 109.82 per barrel, whilst Brent crude rose 18.17 per cent to USD 109.53 per barrel.
The spike has amplified concerns about mounting global inflationary pressures, which in turn are weighing on developing country currencies, including the rupiah.