Jakarta. Rupiah strengthened against the US dollar on Tuesday, buoyed by optimism over Indonesia's economic outlook after S&P Global Ratings projected steady 5% growth over the next three years, helping offset investor concerns over escalating tensions in the Middle East.

The rupiah appreciated by 18 points, or 0.10%, at Rp 18,091 per US dollar from Monday's close of Rp 18,109.

Ibrahim Assuaibi, director of Traze Andalan Futures and a currency analyst, said the rupiah advanced even as markets remained wary of renewed risks surrounding the Strait of Hormuz following heightened tensions between the United States and Iran.

US President Donald Trump recently said Washington would reinstate a naval blockade against Iran following renewed military tensions with Tehran. He also announced plans to impose a 20% fee on cargo passing through the Strait of Hormuz to cover security costs, fueling concerns over another surge in global oil prices.

"Rising crude oil prices have weighed on broader financial markets, pressuring equities and stoking inflation concerns as investors reassess the potential impact of higher energy costs on global growth and central bank policy," Ibrahim said in a statement on Tuesday.

Rupiah also drew support from remarks by Federal Reserve Governor Christopher Waller ahead of this week's US consumer price index (CPI) data. Waller said the Fed should consider raising interest rates if inflation accelerates.

Domestically, sentiment improved after S&P projected Indonesia's economy would expand by around 5% annually over the next three years despite higher fuel prices. For 2026, the ratings agency forecasts economic growth of 5.1%, supported by expectations that growth will moderate at a sustainable pace in the coming quarters.

According to Bloomberg data as of 3:59 p.m. Jakarta time, the Singapore dollar traded at Rp 13,984, the Japanese yen at Rp 111.48, the Australian dollar at Rp 12,561, and the euro at Rp 20,613.