Rupiah Weakens This Morning Under Pressure from US-Iran Conflict Escalation

The rupiah exchange rate against the US dollar moved weaker by 30 points or 0.17 per cent to Rp17,774 per US dollar at the opening of trading on Wednesday, compared to the previous close of Rp17,744 per US dollar. This decline is attributed to the escalating conflict between the US and Iran.

“The rupiah in today’s trading is expected to weaken within the range of Rp17,750 - Rp17,820, influenced by the global continuation of rising oil prices alongside the increasing escalation of the US-Iran conflict,” said Bank Woori Saudara analyst Rully Nova in Jakarta, Wednesday, 2 September 2026.

The Russian news agency, Sputnik, reported that the US carried out an attack on a wedding event in Iran, resulting in four fatalities. If the total US attacks across various regions of Iran are accumulated, the number of injured persons reaches 50.

Other sentiments stem from rising US inflation expectations, which are likely to drive monetary tightening policies by the Fed, thereby increasing expectations for an interest rate hike this month.

“Market participants’ expectations regarding a Fed interest rate hike in September have increased to 6ng6% from the previous 35%. The rate hike (is estimated) at 25 bps (basis points) to 4 per cent,” said Rully.

Regarding domestic sentiment, a shrinking trade surplus is putting pressure on the rupiah alongside an upward trend in US dollar demand to meet import requirements. Similarly, inflation figures have risen with a trend deemed quite high.

Statistics Indonesia (BPS) recorded that Indonesia’s goods trade balance experienced a surplus of US$3.70 billion during the January-July 2026 period. Meanwhile, inflation stood at 0.21 per cent month-to-month (mtm) in August 2026.