Asian currencies slide during vigil over Iran retaliation

BENGALURU: Emerging Asian currencies and equities fell on Monday as fears of retaliation by Iran following US strikes on its nuclear facilities drove investors to seek shelter in safe-haven assets.

The MSCI index of emerging market currencies edged down 0.3% and regional currencies weakened, with the Philippine peso and Thai baht declining 0.8% and 0.6%, respectively.

The units were on track for their lowest levels since April 9 and May 20, respectively.

Taiwan’s dollar lost 0.4% and the South Korean won

shed 0.6%.

The Indonesian rupiah fell 0.6%, its lowest since mid-May. The country’s central bank will continue intervening in currency markets to ensure the rupiah reflects its fundamentals, a senior official said.

The search for safety sent investors rushing to buy the greenback, which extended last week’s rally and gained 0.2%. Meanwhile, oil prices jumped to a five-month high as the conflict between the US and Iran increased the likelihood of supply disruptions.

Iran’s potential retaliation could drive up shipping insurance and freight costs, and lead to longer delivery times, exposing vulnerabilities in global trade, said Christopher Wong, currency strategist at OCBC.

“High-beta and net-oil importing Asia FX such as the Philippine peso, Indian rupee, South Korean won, Taiwan dollar, and Thai baht may be affected more than other Asian currencies.”

Rising oil prices typically pressure regional currencies as most Asian economies are net oil importers and higher prices widen current account deficits.

The Malaysian ringgit slipped 0.7%, tracking regional peers, despite Malaysia’s position as the only net oil and gas exporter among major emerging Asian economies.