Jakarta. Rupiah is facing renewed downside risks as escalating tensions between Iran, Israel, and the United States heighten global uncertainty, with analysts warning the currency could slide toward Rp 20,000 per US dollar in a worst-case scenario.

Anthony Budiawan, Managing Director at Political Economy and Policy Studies (PEPS), said the geopolitical conflict in the Middle East could trigger a surge in global oil prices, disrupt supply chains, and accelerate capital outflows from emerging markets, including Indonesia.

“Conflict in Iran has the potential to disrupt global oil and gas supply and their derivatives, with serious implications for the global economy, including Indonesia,” Anthony said in a note.

He noted that Indonesia’s economy remains vulnerable to external shocks, particularly those driven by geopolitical tensions. Past episodes show the rupiah tends to weaken sharply during periods of heightened global pressure.

Between 2014 and 2015, the rupiah depreciated about 20% to Rp 14,650 per US dollar. In 2018, it fell roughly 13.5% to Rp 15,202. Similar pressure emerged at the onset of the Covid-19 pandemic in 2020, when the rupiah plunged nearly 20% within a month, from Rp 13,675 in late February to Rp 16,575 by late March.

Anthony argued that large foreign exchange reserves do not always guarantee exchange rate stability, as rupiah movements are more heavily influenced by the sustainability of external capital inflows, including government debt issuance.

During past periods of stress, the government responded by ramping up global bond issuance to stabilize the currency, underscoring Indonesia’s continued reliance on external financing.

He warned that the Iran conflict could serve as an additional catalyst intensifying pressure on the rupiah, especially if capital outflows persist and limit room for stabilization.

“Rising oil prices, global supply chain disruptions, and a shift in capital flows from emerging markets to safe-haven assets will create simultaneous pressure on Indonesia’s external balance,” he said.

The rupiah was trading around Rp 16,930 per US dollar as of 9:33 a.m. Jakarta time on Tuesday, according to Bloomberg.

Based on historical patterns, Anthony said a depreciation of 15%–20% is not an extreme scenario under global stress conditions, potentially pushing the rupiah toward Rp 20,000 per US dollar.

“This figure is no longer speculative but grounded in historical data. Under more extreme geopolitical conditions, rupiah depreciation could exceed 20% and materialize within a relatively short period of three to six months,” he concluded.

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