Rupiah weakens after US strikes Iran and Fed signals hawkish stance
Rupiah slid 0.16% to close at Rp17,722 per US dollar on Monday, down from Rp17,693 at the previous close, after the US military struck missile launchers on Iran’s Larak Island and Federal Reserve Chair Kevin Warsh…
Source: The Jakarta Globe · August 31, 2026 at 11:30 AM · AI-assisted report
Single-sourceKUALA LUMPUR, INDONESIA, STRAIT OF HORMUZ, JORDAN, JACKSON HOLE, SINGAPORE, JAPAN, AUSTRALIA, 31 AUGUST 2026 —
Rupiah slid 0.16% to close at Rp17,722 per US dollar on Monday, down from Rp17,693 at the previous close, after the US military struck missile launchers on Iran’s Larak Island and Federal Reserve Chair Kevin Warsh signalled further monetary tightening.
Market Impact
The US attack on Sunday marked the first direct strike on Iran since July 2026. Iran responded by hitting two US air bases in Jordan, according to local media. Traze Andalan Futures director Ibrahim Assuaibi said the rupiah “came under renewed pressure as escalating tensions between the US and Iran made markets increasingly cautious.”
The currency also fell following Warsh’s speech at the Jackson Hole Symposium, where he reiterated that restoring price stability remained the Fed’s top priority. Markets increased bets on a September rate hike, lifting dollar demand.
Domestically, the rupiah faced pressure from rising energy prices and global geopolitical uncertainty. By the end of June 2026, the government had spent Rp233 trillion on energy subsidies and compensation, a figure expected to climb by year-end and strain the 2027 fiscal position.
The rupiah’s drop may increase hedging costs for Malaysian investors holding Indonesian assets, widening spreads on cross-border loans and raising risk premiums for banks exposed to Indonesian debt. Fund managers tracking emerging-market currencies may adjust allocations to limit currency risk.
Related: Kevin Warsh