economy

The Rupiah Has Weakened Due To The Potential Involvement Of The United States In The Iran-Israel Conflict

Permata Bank's Chief Economist, Josua Pardede, stated that the depreciation of the rupiah is influenced by the potential involvement of the United States (US) in the Iran-Israel conflict.

"The depreciation of the rupiah continued as concerns grew regarding the possibility of the US participating in the Israel-Iran conflict, which in turn has heightened geopolitical uncertainty in the Middle East," he remarked to ANTARA in Jakarta on Thursday.

According to a report from the Wall Street Journal, US President Donald Trump informed senior US officials that he has approved a plan to attack Iran, although he has not yet issued a final order for its execution.

Citing anonymous sources, the report indicated that Trump is still awaiting Iran's actions to halt its nuclear program.

He is targeting Iran's underground uranium enrichment facility at Fordow, but attacking it would require the most powerful weapons.

Trump has indicated that a significant decision will be made soon, likely next week, but he has also opened the possibility that this decision could be announced even sooner.

He has also informed Israeli leader Benjamin Netanyahu to "continue the offensive" against Iran, yet has not provided any indication regarding the involvement of the United States in the conflict.

On another note, the weakening of the rupiah is also attributed to the Federal Reserve's (The Fed) decision during the Federal Open Market Committee (FOMC) to maintain interest rates.

According to Anadolu Agency, the Fed has kept interest rates in the range of 4.25-4.5 percent, in line with market expectations. This decision is part of an effort to achieve maximum employment and maintain inflation at a 2 percent level in the long term.

The Fed has warned that uncertainty regarding economic prospects has diminished, yet remains high.

The committee is expected to continue reducing its holdings of Treasury securities and agency debt, as well as agency mortgage-backed securities.

On Friday (20/6/2025), the rupiah is expected to move sideways amid the holiday in the US. We anticipate the rupiah will fluctuate within the range of Rp16,350-16,475 per US dollar," stated Josua.

The exchange rate of the rupiah at the close of trading on Thursday in Jakarta weakened by 94 points or 0.57 percent to Rp16,406 per US dollar from the previous Rp16,313 per US dollar.

The Jakarta Interbank Spot Dollar Rate (JISDOR) from Bank Indonesia today also declined to Rp16,378 per US dollar from the previous level of Rp16,319 per US dollar.

Tag: Jakarta Interbank Spot Dollar Rate Rupiah Wall Street Journal