Rupiah weakens under pressure from rising global crude oil prices

Jakarta (ANTARA) - The Rupiah exchange rate against the US Dollar weakened by 38 points, or 0.22 per cent, at the opening of trading on Friday, reaching Rp17,585 per US Dollar compared to the previous close of Rp17,547 per US Dollar.

Josua Pardede, Chief Economist at Permata Bank, stated that the Rupiah’s depreciation was influenced by the rise in global crude oil prices.

“Brent crude prices have breached the US$100 per barrel level amidst escalating geopolitical tensions in the Middle East, following claims by Iran that it has attacked ten ships around the Strait of Hormuz after US attacks sank five Iranian tankers,” he told ANTARA in Jakarta on Friday.

According to him, the rise in global oil prices has once again triggered investor concerns regarding the risk of widening twin deficits, namely the current account deficit and the fiscal deficit.

Regarding global sentiment, the US Producer Price Index (PPI) for August 2026 was recorded above expectations, reflecting persistent inflationary pressures at the producer level. The US PPI increased to 5.4 per cent year-on-year (yoy) from 4.8 per cent yoy in the previous month, surpassing the consensus of 5.3 per cent yoy, primarily driven by rising energy costs.

Following the release of this data, the probability of a Federal Reserve interest rate hike at the Federal Open Market Committee (FOMC) in September 2026 increased to over 70 per cent, driving up the US Dollar index and US Treasury yields. Both had previously risen alongside global oil prices, which continued to climb past US$100 per barrel during the Asian trading session.

“Today, we expect the Rupiah to move within the range of Rp17,575–Rp17,700 per US Dollar,” said Josua.