Rupiah Slips as Middle East Tensions Rise
The rupiah weakened to IDR 17,984 per U.S. dollar as escalating Middle East tensions weighed on markets, even as Indonesia's foreign reserves rose to $145.6…
JAKARTA — The rupiah edged lower on Wednesday morning as geopolitical tensions in the Middle East intensified. The currency fell 4 points, or 0.02%, to IDR 17,984 per U.S. dollar from the previous close of IDR 17,980.
Lukman Leong, an analyst at Doo Financial Futures, said the worsening Middle East situation was among the factors weighing on the rupiah. Heightened regional tensions often stir market anxiety and push investors toward assets seen as safer.
"A large U.S. attack on Iran in retaliation for attacks on commercial ships in the Strait of Hormuz," Lukman told ANTARA in Jakarta on Wednesday, describing the latest trigger for tensions in the region.
Citing Sputnik, the United States launched a fresh wave of strikes on Iran. The U.S. Central Command (CENTCOM) said the operation was a response to Iranian attacks on three merchant vessels in the Strait of Hormuz, one of the world's busiest shipping lanes.
On Tuesday, Iran's state media outlet IRIB reported that a Qatari vessel named Al-Rekayyat tried to pass through the Strait of Hormuz via the Oman route with support from the U.S. Navy. The ship then came under attack after several warnings were issued.
The Strait of Hormuz is a strategic corridor for global energy traffic. Any disruption there can affect world oil prices and trigger volatility in financial markets, including the currencies of emerging economies.
Foreign Reserves Offer Support
On the other hand, the rupiah found support from higher Indonesia foreign exchange reserves. Bank Indonesia, the country's central bank, reported that reserves stood at $145.6 billion at the end of June 2026.
The figure rose slightly by $700 million from $144.9 billion at the end of May 2026. The increase signaled stronger external resilience for Southeast Asia's largest economy amid global pressure.
According to Bank Indonesia, the June 2026 rise in reserves was mainly driven by tax and services receipts. Adequate foreign reserves are important to maintain exchange-rate stability and meet financing needs.
The development came alongside government debt payments and exchange-rate stabilization measures taken by the monetary authority. The central bank regularly steps into the market to curb excessive volatility.
Market participants are expected to keep a close watch on Middle East geopolitics as the key driver of short-term sentiment. As long as tensions persist, pressure on emerging-market currencies is likely to remain.
Even so, Indonesia's relatively steady domestic fundamentals are expected to limit deeper losses. The combination of strong reserves and stabilization policy remains an important buffer for the rupiah against external shocks.
