Jakarta. Rupiah strengthened further against the US dollar on Friday, closing below the key Rp 18,000 threshold as positive domestic economic indicators outweighed persistent geopolitical tensions in the Middle East.

The rupiah appreciated 65 points, or 0.36%, to Rp 17,921 per US dollar at Friday's close, compared with Rp 17,986 in the previous session. It had opened the day 6 points higher at Rp 17,980.

Ibrahim Assuaibi, director of Traze Andalan Futures and a currency analyst, said the rupiah gained despite renewed tensions between the United States and Iran after another wave of US strikes on Iranian targets on Thursday.

The renewed attacks have extended the Middle East conflict into its fifth month, keeping crude oil prices elevated and reviving concerns that higher energy costs could fuel inflation.

US Federal Reserve officials have also continued to stress that inflation risks remain despite recent signs of easing price pressures.

"Policymakers have repeatedly warned that higher oil prices resulting from the Middle East conflict could complicate the inflation outlook. They also said they need several more months of subdued inflation data before considering interest rate cuts," Ibrahim said in a statement on Friday.

Domestically, sentiment was supported by stronger business activity, with Bank Indonesia reporting that its Business Activity Survey showed the Weighted Net Balance (WNB) rose to 12.97% in the second quarter of 2026 from 10.11% in the previous quarter.

Separately, the central bank's Prompt Manufacturing Index (PMI-BI) eased to 51.43 in the second quarter from 52.03 in the first quarter, although it remained above the 50-point threshold that indicates continued expansion in manufacturing activity.

According to Bloomberg data, the Singapore dollar traded at Rp 13,884, the Japanese yen at Rp 110.4, the Australian dollar at Rp 12,497, and the euro at Rp 20,507.