Jakarta.  Rupiah weakened beyond the psychological Rp 18,000-per-dollar mark on Wednesday as renewed conflict in the Middle East and rising US Treasury yields fueled demand for the greenback.

The Indonesian currency closed down 34 points, or 0.19%, at Rp 18,014 per US dollar, compared with Rp 17,980 in the previous session. Earlier in the day, the rupiah had opened 7 points, or 0.04%, lower at Rp 17,987 per dollar.

Ibrahim Assuaibi, director of Traze Andalan Futures, said the rupiah came under pressure after geopolitical tensions in the Middle East escalated following a fresh wave of US attacks on Iran.

"The return of hostilities and signs of broader shipping disruptions in the Strait of Hormuz have once again heightened concerns over supply disruptions in the Middle East," Ibrahim said on Wednesday.

The rupiah also weakened as investors monitored a rise in US Treasury yields. The yield on the benchmark 10-year US Treasury climbed 5.5 basis points to 4.525%.

"Traders are now turning their attention to the minutes of the Federal Open Market Committee's June meeting, which will be released early Thursday Jakarta time, for further insight into the Fed's thinking. Communication under the new Chair, Kevin Warsh, will also remain a key focus," Ibrahim said.

On the domestic front, sentiment was weighed down by Indonesia's fiscal position after the government reported a state budget deficit of Rp 196.5 trillion ($10.95 billion), equivalent to 0.76% of gross domestic product, in the first half of 2026. The deficit widened from Rp 180.4 trillion, or 0.70% of GDP, recorded at the end of May.

Despite the monthly increase, the first-half deficit remained lower than the 0.84% of GDP recorded in the same period last year.

Meanwhile, Bank Indonesia reported that the country's foreign exchange reserves rose to $145.6 billion at the end of June from $144.9 billion a month earlier, although the level remained close to its lowest point in nearly two years.

As of 3:59 p.m. Jakarta time, the Singapore dollar traded at Rp 13,926, the Japanese yen at Rp 110.86, the Australian dollar at Rp 12,457, and the euro at Rp 20,571.

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