Bank Indonesia intervened in foreign exchange markets to stabilize the rupiah amid escalating tensions in the Middle East, which have triggered a 4.2% drop in the currency against the U.S. dollar in three days. The move follows sharp spikes in global risk aversion and energy volatility.
- Rupiah dropped 4.2% to 16,780/USD in three days before intervention
- Bank Indonesia sold $1.2 billion in foreign exchange reserves on March 1
- VIX climbed to 28.4, its highest since October 2024
- CL=F crude oil futures rose 6.8% amid supply disruption fears
- IDX Composite Index fell 2.3% on heightened risk aversion
- Bank Indonesia raised policy rate to 7.25% to bolster capital inflows
Bank Indonesia executed a series of foreign exchange interventions on March 1, 2026, selling over $1.2 billion in U.S. dollars to stem the rupiah's freefall, which touched 16,780 per dollar—the weakest level since February 2025. The intervention came as geopolitical risks from the Iran crisis intensified, spurring a flight to safe-haven assets and disrupting emerging market currencies. The IDX Composite Index fell 2.3% on the day, while the VIX index surged to 28.4, its highest level since October 2024, signaling heightened market stress. The rupiah’s decline reflects broader regional and global pressures, as crude oil futures (CL=F) rose 6.8% over the same period, driven by fears of supply disruptions in the Strait of Hormuz. Defense sector stocks across Asia, particularly in India and South Korea, saw gains of 4.1% to 5.9% on increased defense spending speculation. Indonesia’s central bank also raised its overnight deposit rate by 25 basis points to 7.25% in a separate move to attract capital inflows and support domestic liquidity. The intervention underscores growing vulnerability in commodity-linked emerging market currencies amid global uncertainty. While the rupiah stabilized to close at 16,510 per dollar on March 2, the resilience of the central bank’s actions remains under scrutiny. Analysts warn that continued escalation in the Middle East could force further tightening or additional market interventions across Southeast Asia.