13/07/26

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USD/IDR advanced in Asian trading on Monday, recovering part of the previous session’s decline and trading near 18,180. The pair found support from a stronger US Dollar as investors sought safety amid rising geopolitical tensions in the Middle East.

US Central Command carried out another round of airstrikes on Sunday aimed at weakening Iran’s ability to threaten commercial shipping lanes. Reports also indicated that US forces have now struck more than 300 Iranian targets over three nights, including 140 on Saturday alone. The escalation has increased uncertainty over the security of key maritime routes, with conflicting signals from Washington and Tehran adding to market caution.

The conflict has also lifted oil prices, reinforcing concerns that higher energy costs could feed inflation and keep US borrowing costs elevated for longer. That dynamic has strengthened demand for the Dollar, which typically benefits when traders expect tighter financial conditions or prefer lower-risk assets. Attention now turns to Tuesday’s US Consumer Price Index data, which may offer a clearer read on the Federal Reserve’s next policy steps.

Markets expect June headline CPI to ease 0.1% from the previous month, while core CPI is forecast to rise 0.3%. Traders continue to price in the possibility of one more rate increase before the end of the year, keeping interest-rate expectations central to near-term currency moves. Fed Chair Kevin Warsh is also scheduled to make his first official appearance before Congress this week, adding to the focus on the US policy outlook.

The Indonesian Rupiah may find some support from domestic conditions. Local equities extended their rally for a second straight day, led by cyclical stocks, infrastructure, basic materials, and energy. Sentiment improved after data pointed to solid investment activity in strategic sectors within the country’s special economic zones.

That equity strength could help limit further Rupiah weakness. Foreign investors buying Indonesian shares must convert foreign currency into Rupiah, creating demand for the local currency. In the current environment, that flow may provide a temporary buffer even as broader external pressures keep USD/IDR elevated.