Mid-East Conflict Indirectly Shakes Global Financial Markets: BI

RRI.CO.ID, Jakarta – Geopolitical turmoil stemming from the conflict between the United States, Israel, and Iran has once again rattled global financial markets, creating uncertainty that has also affected Indonesia through pressure on capital flows and exchange rates.

Bank Indonesia (BI) Senior Deputy Governor Destry Damayanti explained that the greatest impact comes from the conflict’s indirect effects, with the US’s role as a global financial hub amplifying market volatility.

She noted that the direct impact of the Iran-Israel conflict on the global economy is limited, as neither country is a major financial hub, and market reactions in the Middle East remain relatively contained.

“However, the indirect impact of this conflict will be very significant,” Destry said in Jakarta on Monday, April 13, 2026, as quoted by Antara. She added that Iran’s strategic position further heightens global uncertainty, driving up risk sentiment among international investors.

This situation has triggered risk-off behavior, with market participants shifting investments toward safe-haven assets. As a result, global capital flows have returned to advanced economies.

The trend is reflected in the strengthening of the US dollar index (DXY) and the rise in US Treasury yields to the 4.5–4.6 percent range. Meanwhile, capital flows to emerging markets, including Indonesia, have declined.

“So, this means risks are causing global uncertainty, leading to a rise in the DXY, an increase in UST yields, a decline in capital flows to emerging markets, and increased pressure on the exchange rates of various currencies,” Destry explained.

Although Indonesia’s domestic market recorded inflows into Government Securities (SBN), the stock market, and BI’s Rupiah Securities (SRBI), the country still experienced an overall outflow of around IDR 21 trillion (USD 1.22 billion). This underscores the strong external pressure weighing on the stability of the national financial market. ***