Jakarta. The rupiah weakened back above the 18,000-per-dollar threshold on Monday after investors reacted to the surprise resignation of Bank Indonesia Governor Perry Warjiyo, overshadowing a broadly weaker US dollar that had supported the Indonesian currency in recent sessions.

The rupiah closed 0.26% lower at Rp 18,009 per US dollar, according to Bloomberg, reversing part of last week's gains that had briefly pushed the currency below the psychologically important Rp 18,000 level.

"The rupiah should have strengthened today because of the weaker US dollar and easing geopolitical tensions in the Middle East. However, the resignation of the Bank Indonesia governor weighed on sentiment toward both the rupiah and Indonesian equities," currency analyst Lukman Leong said.

The US dollar weakened against most major currencies in Asian trading after the United States suspended its military campaign against Iran, easing geopolitical concerns, pushing oil prices lower and improving global risk sentiment.

Despite the more favorable external backdrop, Lukman said domestic developments were currently exerting a greater influence on the rupiah than global factors.

Without news of Perry's resignation, he said, the rupiah would likely have strengthened in line with the broader decline in the US dollar.

Lukman expects the currency to remain under pressure in the near term as investors monitor domestic political developments, the upcoming Federal Open Market Committee (FOMC) meeting and key US economic data releases.

He forecast the rupiah to trade between Rp 17,900 and Rp 18,150 per dollar this week, adding that a sustained return to around Rp 17,500 would be difficult without a lasting improvement in geopolitical conditions.

He also urged the government to appoint a permanent central bank governor as soon as possible to reduce market uncertainty and restore investor confidence.

Senior Deputy Governor Destry Damayanti has been appointed acting governor until President Prabowo Subianto and the House of Representatives appoint Perry's successor in accordance with existing procedures.

Permata Bank Chief Economist Josua Pardede said investors were still assessing the implications of Perry's resignation, resulting in mixed market reactions.

Besides the weaker rupiah and declines in Indonesian equities, yields on 10-year government bonds also rose on Monday, suggesting investors had yet to form a clear view of the leadership transition.

"The market is still digesting the latest developments," Josua said during Investor Market Today.

He noted that investors were awaiting greater clarity on the appointment of a new central bank governor and any implications for future monetary policy.

However, Josua stressed that Bank Indonesia's policy direction is determined collectively by its Board of Governors, meaning the leadership transition should not automatically lead to changes in monetary policy.

He also praised Perry's record in maintaining Indonesia's macroeconomic stability during his tenure.

The government earlier confirmed that President Prabowo Subianto had formally accepted Perry's voluntary resignation, which was submitted for personal reasons.