Jakarta. Rupiah extended its decline against the US dollar on Friday, pressured by escalating tensions in the Middle East, rising oil prices and expectations surrounding the Federal Reserve’s interest-rate policy.

Based on Bloomberg data monitored at 3:20 p.m. Jakarta time, the rupiah weakened 64 points, or 0.36%, to Rp 17,611 per US dollar from Rp 17,547 on Thursday.

Traze Andalan Futures Director Ibrahim Assuaibi said the rupiah remained under pressure as prolonged geopolitical tensions surrounding the US-Iran conflict in the Middle East continued to weigh on market sentiment, alongside expectations of the Fed’s interest-rate direction.

In the Middle East, tensions escalated after Iran said it had attacked 10 vessels near the Strait of Hormuz, while the US said it had retaliated by sinking five Iranian oil tankers.

“These attacks mark the most severe fighting in recent months and indicate little sign of de-escalation as the conflict enters its seventh month,” Ibrahim said in a statement Friday.

The intensifying conflict and disruption risks around the Strait of Hormuz have raised concerns over another surge in global oil prices, potentially adding to inflationary pressures.

The rupiah also came under pressure after US producer price inflation rose to 5.4% year-on-year, slightly above the 5.3% forecast and up from 4.8% previously. Core producer inflation also accelerated to 4.6% from 4.3%.

“Today, the market’s focus will turn to the US Consumer Price Index, which will be released at 7:30 p.m. Jakarta time,” Ibrahim said.

Domestically, the rupiah was also pressured by oil prices rising above $100 per barrel, increasing fiscal risks for Indonesia as a net oil importer.

“The main impact and fiscal burden arising from this situation is the swelling of energy subsidies and compensation, which will increase the burden on the state budget,” Ibrahim said.

Other currencies against the rupiah as of 3:59 p.m. Jakarta time included the Singapore dollar at Rp 13,887, Japanese yen at Rp 114.27, Australian dollar at Rp 12,622 and euro at Rp 20,425.

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