Rupiah Weakens to Rp17,862 per US Dollar, Pressured by Rising Oil Prices
The rupiah exchange rate weakened again against the US dollar in trading on Tuesday (18/8). The rupiah closed at Rp17,862 per US dollar, down 64 points or 0.36% compared to the previous closing position of Rp17,798 per US dollar.
Bank Woori Saudara analyst Rully Nova assessed that the pressure on the rupiah was inseparable from the rise in world oil prices. The movement of commodity prices was influenced by market concerns about the possibility of continued conflict between the US and Iran.
“The rupiah weakened in today’s trading, influenced by the global rise in oil prices due to concerns about the continuation of the US-Iran conflict,” he said.
The rise in oil prices occurred after US President Donald Trump stated he would not extend the framework agreement with Iran. This condition increased market concerns about escalating tensions in the Strait of Hormuz region.
Anadolu Agency reported that oil prices jumped more than 2% following Trump’s statement. At 18.50 GMT, Brent crude, the international oil price benchmark, was recorded up 2.4% to US$90.60 per barrel. Meanwhile, West Texas Intermediate (WTI) crude, the US market benchmark, strengthened 2.2% to US$84.20 per barrel.
Trump previously said he was not seeking to extend the agreement reached with Iran in June through Pakistani mediation. The statement was made as the 60-day negotiation deadline drew closer, while a comprehensive agreement had not yet been reached.
The situation raised new concerns about the possibility of increased tensions in the region. If the conflict worsens, energy shipping flows through the Strait of Hormuz could potentially be disrupted. The strait is a strategic route that plays an important role in world oil trade.
Citing Sputnik, Trump also stated that the idea of making the Strait of Hormuz part of US territory was a “good” idea. The US President again claimed that the US has “full control” over the Strait of Hormuz.
On the other hand, Iranian Army Commander General Amir Hatami stated that the US has no right of passage through the Strait of Hormuz, the Persian Gulf, or the Gulf of Oman. He also assessed that the Strait of Hormuz is an important geopolitical asset for Iran.
Hatami emphasised that conditions in the strategic waterway would not return to how they were before, amid rising geopolitical tensions in the region.
From the domestic economic side, the rise in oil prices is also a concern because it could put pressure on Indonesia’s fiscal position. Rully said oil prices above the assumption in the State Revenue and Expenditure Budget (APBN) could widen the deficit when economic fundamentals still face challenges.
“The rise in oil prices above the APBN assumption (US$70 per barrel) will trigger a fiscal deficit, while the fundamental economic condition is not yet solid,” Rully revealed.
In addition to external factors, the domestic financial market is also awaiting the results of Bank Indonesia’s Board of Governors Meeting (RDG) taking place on 18-19 August 2026.
Market participants expect BI not to raise its benchmark interest rate at the meeting. However, the direction of BI policy will not only be seen from the interest rate decision, but also from other policies pursued to maintain exchange rate and economic stability.
“However, the policy mix beyond interest rates will determine the consistency of BI’s stability policy,” he said.
In line with the weakening of the rupiah in the spot market, Bank Indonesia’s Jakarta Interbank Spot Dollar Rate (JISDOR) on Tuesday also fell. JISDOR was recorded at Rp17,856 per US dollar, weakening from the previous position of Rp17,836 per US dollar.