Jakarta. Rupiah strengthened on Tuesday and is expected to extend its gains on Wednesday as easing geopolitical tensions in the Middle East lift market sentiment, although shrinking foreign exchange reserves remain a key risk for the currency.

Indonesian rupiah closed Tuesday afternoon 87 points stronger against the US dollar at Rp 16,862, after briefly gaining as much as 95 points from the previous close of Rp 16,925.

Ibrahim Assuaibi, director at Traze Andalan Futures, said the rupiah could continue to fluctuate but remain on an upward trend in Wednesday’s trading.

“For tomorrow’s trading, the rupiah is expected to fluctuate but close stronger in the range of Rp 16,820–Rp 16,870,” Ibrahim said in a written statement on Tuesday.

He said the currency is likely to gain further as signs emerge that tensions in the Middle East could ease.

The development followed communication between Russian President Vladimir Putin and US President Donald Trump regarding efforts to resolve the war in Iran. Meanwhile, Iran’s Islamic Revolutionary Guard Corps (IRGC) has also indicated it plans to determine an end to the conflict.

“However, prices remain under pressure as Trump is considering easing oil sanctions on Russia and releasing emergency crude reserves as part of a series of options aimed at curbing the surge in global oil prices, according to several sources,” Ibrahim said.

Such developments are expected to influence the rupiah’s direction in the near term.

Still, the rupiah faces pressure from Indonesia’s declining foreign exchange reserves, partly due to the ongoing conflict involving the United States, Israel and Iran.

Indonesia’s foreign reserves fell to $151.9 billion in February 2026, down from $154.6 billion in January.

Bank Indonesia acknowledged the decline was largely due to monetary interventions carried out to stabilize the rupiah amid a series of global pressures that have weighed on the currency since the start of the year.