The Indonesian rupiah weakened toward IDR 18,100 per U.S. dollar on Thursday, extending recent losses as renewed conflict in the Middle East supported safe-haven demand for the U.S. dollar and bolstered higher-for-longer interest rate expectations. Domestic sentiment also deteriorated. Indonesia's retail sales recorded their steepest annual decline in three years in May, highlighting weaker consumer spending following higher non-subsidized fuel prices. Meanwhile, June consumer sentiment slipped to its lowest level since September, suggesting households are becoming more cautious about income prospects, employment conditions, and future spending. Adding to the pressure, S&P Dow Jones Indices flagged a possible downgrade of Indonesia to frontier-market status in 2027, raising concerns over potential foreign outflows. Still, the rupiah's losses were capped by easing oil prices, stronger loan growth in May, and faster government budget execution aimed at supporting economic activity.