Jakarta. Rupiah remained stuck near the psychologically important Rp 18,000-per-dollar level on Friday, as escalating geopolitical tensions, rising oil prices, and domestic fiscal concerns continued to weigh on Indonesia’s currency.

According to Bloomberg data at 1:03 p.m. Jakarta time, the rupiah traded at Rp 17,873 per US dollar.

Valbury Asia Futures Research and Education Coordinator Nanang Wahyudin said the rupiah was facing pressure from a combination of global and domestic factors unfolding simultaneously.

He said the geopolitical conflict involving the United States and Iran, along with growing risks of disruption in the Strait of Hormuz, had pushed global oil prices higher and triggered a risk-off sentiment among investors, driving demand for safe-haven assets such as the US dollar.

“With a combination of global shocks, elevated oil prices, a strong US dollar, and capital outflows, pressure on the rupiah has become quite significant,” Nanang said.

Beyond geopolitical tensions, markets remain clouded by uncertainty over the future direction of Federal Reserve policy. Elevated US Treasury yields have made rupiah-denominated assets less attractive, encouraging foreign capital outflows.

On the domestic front, investors are also monitoring the possibility of a wider state budget deficit, declining foreign exchange reserves, a narrowing trade surplus, and a current account deficit that is projected to reach 1.1% of gross domestic product.

Nanang said market confidence was also influenced by perceptions of the government’s policy direction and fiscal stability, suggesting that the rupiah’s weakness could not be attributed solely to external factors.

He added that the upcoming Eid al-Adha holiday could amplify exchange-rate volatility as thinner domestic market liquidity tends to magnify price movements.

“The holiday itself is not a fundamental factor. However, when global pressures are already elevated, thinner liquidity can make exchange-rate movements in the offshore market appear more pronounced,” he said.

Despite the recent weakness, Nanang said Indonesia’s economic fundamentals remained relatively solid. However, they have not been strong enough to offset persistent global headwinds and market concerns.

He argued that Bank Indonesia’s efforts to support the rupiah through higher interest rates and more attractive yields on Bank Indonesia Rupiah Securities (SRBI) should be complemented by consistent fiscal policies.

Nanang said that fiscal adjustments such as reallocating spending toward productive sectors, maintaining deficit discipline, and communicating a clear commitment to fiscal prudence would help lower risk premiums and improve the effectiveness of the central bank’s measures.

He expects short-term pressure on the rupiah to persist, with a realistic trading range of Rp 17,500 to Rp 18,000 per US dollar.

“The rupiah’s room for appreciation remains limited in the near term. A return to the Rp 15,000 range would be difficult without major improvements in global conditions and stronger domestic investor confidence,” he concluded.

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