Jakarta. Rupiah weakened to Rp 17,917 against the US dollar on Wednesday despite Bank Indonesia's decision to keep its benchmark interest rate unchanged, as investors remained wary of escalating Middle East tensions and a hawkish US rate outlook.

The Indonesian currency fell from Tuesday's close of Rp 17,888 per dollar.

Ibrahim Assuaibi, director of Traze Andalan Futures and a currency analyst, said the rupiah came under pressure as investors weighed the escalating conflict involving the US and Iran.

Market participants are also closely watching developments involving Yemen's Iran-backed Houthi rebels after they threatened a naval blockade that could disrupt shipping through the Red Sea.

The rupiah was further pressured by expectations that the US Federal Reserve could continue raising interest rates in 2026.

Domestically, the currency remained under pressure despite Bank Indonesia keeping its benchmark BI-Rate unchanged at 5.75% on Wednesday. The central bank also maintained the Deposit Facility rate at 4.75% and the Lending Facility rate at 6.50%.

"Alongside its decision to hold the benchmark rate, Bank Indonesia is pushing other policies, including incentives to attract foreign capital into Indonesia's money market in order to maintain rupiah stability," Ibrahim said in a statement on Wednesday.

According to Bloomberg data as of 3:59 p.m. Jakarta time, the Singapore dollar traded at Rp 13,866, the Japanese yen at Rp 109.94, the Australian dollar at Rp 12,537, and the euro at Rp 20,435.

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