US Dollar Steadies as Geopolitical Tensions Boost Safe-Haven Demand

The Indonesian Rupiah (IDR) showed minimal movement on Tuesday as the US Dollar (USD) held steady amid rising safe-haven demand. The USD/IDR pair traded around 17,930 during European hours, with potential for further gains as the Greenback strengthens due to escalating geopolitical conflicts. The Houthi group in Yemen launched missile and drone strikes against Saudi Arabian targets, including King Khalid International Airport in Riyadh, disrupting air traffic and driving investors toward safe-haven assets like the US Dollar.

The Dollar's strength is also supported by a surge in US Treasury yields, which hit 24-year highs due to a global bond selloff driven by expanding fiscal deficits and persistent inflation. The latest ISM data revealed that input costs in the US services sector increased at their fastest pace in over four years, reinforcing inflation concerns. ING’s Francesco Pesole noted that the Dollar continues to find support, largely due to the euro’s weakness and rising global bond yields, even as equity markets perform strongly.

Despite the Dollar’s resilience, the Indonesian Rupiah may receive support from domestic fiscal conditions through August, supported by revenue growth. Traders are awaiting key economic releases later this week, including September foreign exchange reserves and August retail sales figures. While the Rupiah resisted further appreciation, the broader trend suggests the Dollar could remain underpinned by a constructive domestic backdrop.