The US Dollar (USD) surged to new highs against both the Indonesian Rupiah (IDR) and the Swiss Franc (CHF) amid escalating geopolitical tensions in the Middle East, particularly surrounding the Strait of Hormuz [1][2]. On Thursday, the USD/IDR pair rallied beyond the 17,300 level, reaching a fresh all-time peak of 17,324, marking the third consecutive day of strong gains and positioning the IDR as one of the worst-performing emerging Asian currencies this month [1]. The depreciation of the Rupiah has been attributed to rising global uncertainty, with Bank Indonesia's Deputy Governor Thomas Djiwandono citing efforts to strengthen the interest rate structure and increase intervention intensity to stabilize the currency [1]. Despite expectations from Chief Economic Minister Airlangga Hartarto that Indonesia's first-quarter economic growth could reach around 5.5% due to holiday spending and government stimulus, these measures have not alleviated pressure on the IDR [1].
Simultaneously, the USD/CHF pair climbed to a one-and-a-half-week high, extending its recovery for the third straight day and trading beyond the mid-0.7800s [2]. The continued instability in the Strait of Hormuz, highlighted by reports that Iran fired on three ships and escorted two to Iranian waters, has kept crude oil prices elevated and fueled inflationary concerns [2]. The Wall Street Journal reported these incidents on Wednesday, underscoring the ongoing disruptions to energy supplies through this strategic waterway [2]. US President Donald Trump stated on Tuesday that the US Navy blockade of Iranian ports would persist, while Iran has demanded the complete removal of the blockade as a precondition for resuming negotiations [2].
The risk-off sentiment has driven capital flows toward safe-haven assets like the US Dollar, further strengthening its position against both the IDR and CHF [1][2]. Expectations of a less dovish Federal Reserve, amid persistent inflation and resilient US economic activity, have also contributed to the USD's uptrend [1][2]. Despite the bullish outlook, some caution is advised due to overbought conditions in the USD/IDR pair and technical resistance levels in the USD/CHF pair, with traders awaiting further economic data and developments in the US-Iran situation for additional direction [1][2].
CONCLUSION
Escalating Middle East tensions and disruptions in the Strait of Hormuz have propelled the US Dollar to record highs against the Indonesian Rupiah and boosted its strength versus the Swiss Franc. Persistent geopolitical risks, elevated oil prices, and expectations of a firm Federal Reserve stance continue to underpin the USD, while emerging market currencies like the IDR remain under significant pressure. Market participants are closely monitoring further developments in the US-Iran saga and upcoming US economic data for future direction.