Jakarta. Bank Indonesia said it is closely monitoring financial markets as tensions escalate following joint Israeli-US strikes on Iran, with the central bank watching potential spillovers to the rupiah’s stability.

“Bank Indonesia will continue to closely observe market movements and respond appropriately, including ensuring that the rupiah moves in line with its fundamentals,” said Erwin Gunawan Hutapea, head of BI’s Monetary Management and Securities Asset Department, in a statement on Monday.

As of 12:34 p.m. Jakarta time, Bloomberg data showed the rupiah trading at Rp 16,854 per US dollar. The rupiah’s pressure partly reflects heightened geopolitical tensions in the Middle East.

Erwin said the central bank will remain active in the market through intervention measures, including Non-Deliverable Forward (NDF) transactions in offshore markets, as well as spot and Domestic Non-Deliverable Forward (DNDF) transactions in the domestic market.

“BI will also continue optimizing its policy mix to improve the effectiveness of interest rate transmission,” he said.

Earlier, Permata Bank Chief Economist Josua Pardede said rising geopolitical tensions typically trigger portfolio shifts away from risk assets toward safe-haven assets such as the US dollar and US government bonds.

“The impact on Indonesia usually appears as pressure from capital outflows, rupiah depreciation, and rising government bond yields as investors demand higher risk compensation,” Josua told B-Universe on Monday.

He added that during the early phase of escalation, the rupiah’s weakening tends to remain limited if markets view the conflict as temporary and unlikely to spread. However, pressure could intensify significantly if the conflict drags on or disrupts global energy supply chains.

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