TheIKNPost.com – The Indonesian rupiah weakened against the U.S. dollar on Tuesday, pressured by the People’s Bank of China’s (PBoC) decision to set a higher-than-expected midpoint for the yuan, coupled with escalating geopolitical tensions in the Middle East.
According to market data, the rupiah opened in the spot market at Rp16,828 per dollar, down 0.2% from the previous close. The downward trend continued throughout the morning session, with the currency hitting Rp16,835 per dollar by 11:00 AM local time.
The primary catalyst for the rupiah’s decline was the strength of the U.S. Dollar Index (DXY), which climbed 0.14% to 97.84. This rebound followed the PBoC’s latest fixing, where the central bank set the yuan’s daily reference rate at 6.9414 per dollar—significantly higher than the market’s consensus of approximately 6.92.
Analysts suggest that Beijing’s cautious approach to managing the renminbi’s appreciation has reignited demand for the greenback. The ripple effect was felt across Asian markets, with the Japanese yen, South Korean won (-0.22%), and Malaysian ringgit (-0.18%) all trading lower against the dollar.
Geopolitical Risks Weigh on Emerging Markets
Beyond regional currency movements, the rupiah remains sensitive to global geopolitical developments. Investors are closely monitoring the high-stakes nuclear negotiations between the United States and Iran.
The market’s risk appetite has been further dampened by reports of increased U.S. military presence in the Middle East. President Donald Trump has reportedly set a 15-day deadline for a diplomatic breakthrough, while also ordering the withdrawal of non-emergency staff from the U.S. Embassy in Beirut.
“The current climate of uncertainty is driving investors toward safe-haven assets,” a market observer noted. “As a result, capital is flowing out of emerging markets as participants seek to minimize risk exposure.”
Market analysts expect the rupiah to remain under pressure for the remainder of the trading day, with the currency projected to fluctuate within a range of Rp16,800 to Rp16,850 per U.S. dollar.
