Indonesian rupiah falls to record low on US-Iran deadlock

Indonesia's rupiah hit a record low below 17,500 per dollar on Tuesday, leading a broad pullback in emerging Asian currencies, as stalled US-Iran peace negotiations kept oil prices elevated and risk appetite subdued. The Philippine peso dipped 0.8% in its third straight session of losses, while the Indonesian rupiah weakened to an all-time low of 17,510 against the US dollar. The peso and the rupiah have declined nearly 5% and 7%, respectively, since the war in the Middle East began in late February. "In Asia, the Indonesian rupiah remains under pressure... as lingering energy disruptions raise the risk of fuel shortages," said MUFG senior currency analyst Lloyd Chan. "Indonesia's vulnerability is heightened by relatively low crude inventory buffers, largely due to storage capacity constraints." The 10-week-long conflict in the Middle East has battered currencies across energy-reliant Asian economies, prompting central banks and governments to scramble and roll out measures to curb currency weakness, though with limited success. Oil prices rose 1% on Tuesday on sustained supply worries after US President Donald Trump said the ceasefire with Iran was "on life support", pointing to disagreements over several demands. Indonesia's benchmark stock index shed as much as 1.5% to its lowest since late June 2025, with heavy losses in utilities firm Barito Renewables and chemicals firm Chandra Asri Pacific. Alongside energy shocks, Indonesia is grappling with concerns over fiscal discipline, central bank independence, and stock market regulation. Bank Indonesia's governor assured markets last week that the central bank has sufficient foreign exchange reserves to make strong market interventions to stabilise the rupiah, if required. Meanwhile, the Indian rupee hit an all-time low of 95.6250 on Tuesday, weighed down by expectations of prolonged high crude prices, persistent portfolio outflows and weakening sentiment. MSCI's EM Asia equities gauge declined 0.5%, dragged down by a 3.2% drop in South Korea's tech-heavy Kospi index. The benchmark climbed to a record high before pulling back sharply, as investors booked profits. Chipmaker Samsung Electronics fell almost 4%, and peer SK Hynix declined more than 1%. Taiwan shares rose 1.1% to an all-time peak, and Malaysia's benchmark climbed 0.4% ahead of first-quarter economic growth data on Friday. Malaysia's economic growth likely eased in the first quarter, according to a Reuters poll, a week after the central bank stood pat on interest rates amid concerns about a slowdown and inflation from the prolonged conflict in the Middle East. Philippine stocks slipped 0.3%, with Jollibee Foods dropping almost 9% to its lowest since October 2020 after a near 44% plunge in first-quarter profit. The company also said it was reviewing certain 2026 targets.