Gotrade News - The Indonesian rupiah crashed to an all-time low of Rp 17,803 per US dollar on May 26, 2026. The plunge followed reports of US and Israeli strikes near the Strait of Hormuz against Iranian targets.
Safe-haven demand for the dollar surged as Brent crude jumped 1.9% to US$111.34 per barrel. The shock dragged Asian currencies lower and lifted defensive plays across global equity and bond markets.
Key Takeaways
- Rupiah touched Rp 17,803/USD intraday before settling at Rp 17,790, a fresh historic low.
- Strait of Hormuz strikes sent Brent crude up 1.9% and reignited safe-haven dollar demand.
- MSCI removed six Indonesian stocks from its Global Standard Index, deepening foreign outflow pressure.
Hormuz Strikes Trigger Safe-Haven Rotation
According to Bloomberg Technoz, the rupiah opened at Rp 17,748 and weakened to Rp 17,764 by 09:18 WIB. The slide accelerated through the morning as risk sentiment soured across Asian trading floors.
The US dollar index held steady at 99 while Brent crude traded near US$98.36 per barrel earlier in the session. Demand for dollar exposure climbed as traders priced in higher oil prices and a wider Middle East conflict.
Most Asian currencies reversed earlier gains during the morning session. The Thai baht fell 0.32%, the Malaysian ringgit and Philippine peso weakened, while the Korean won and Taiwan dollar held firm.
Investors looking for dollar exposure rotated into instruments like the Invesco DB US Dollar Bullish Fund (UUP). The product tracks the greenback against a basket of major developed-market currencies.
Oil-linked equities also benefited from the surge in crude futures during the session. Energy ETFs such as the United States Oil Fund (USO) drew buying interest from macro traders.
Indonesia Faces Triple Pressure From MSCI, Oil, and Geopolitics
As reported by Katadata, the rupiah touched Rp 17,803 at 09:34 WIB before settling at Rp 17,790 by mid-morning. The currency has weakened over 9% year-to-date against the Chinese yuan and Malaysian ringgit.
The rupiah has also lost roughly 5% against the Japanese yen since the start of the year. Chinese yuan strength compounded the pressure, with HSBC forecasting 6.65 per dollar by year-end.
Deutsche Bank projects the yuan strengthening to 6.55 against the greenback over the medium term. Goldman Sachs maintains an even more bullish forecast of 6.50 within twelve months.
Per Beritasatu, MSCI removed six Indonesian stocks from its Global Standard Index this month. Indonesia's index weighting fell from around 0.8% to between 0.5% and 0.6%.
DBS economist Radhika Rao said concerns over the MSCI review, geopolitics, and domestic developments continue pressuring the currency. The downgrade triggered passive fund outflows from Indonesian equities.
Ariston Tjendra of Doo Financial framed the move as Middle East conflict euphoria spreading across asset classes. He cited rising crude oil prices and renewed inflation expectations as key transmission channels.
The iShares MSCI Indonesia ETF (EIDO) tracks the same index basket affected by the MSCI changes. Foreign investors typically use the ETF to express directional views on Indonesian equity risk.
West Texas Intermediate crude futures rose 2.3% to US$107.84 per barrel during the session. Brent and WTI gains historically pressure rupiah-denominated import bills and widen the current account deficit.
Bank Indonesia faces a difficult policy choice between defending the currency and supporting domestic growth. Traders will watch for any verbal or operational intervention signals in coming sessions.
