BENGALURU: Most emerging Asian currencies retreated on Monday, weighed down by a resilient US dollar as unresolved US-Iran peace negotiations fuelled safe-haven demand, while a relentless AI-driven rally lent support to regional stock markets.
MSCI’s index tracking global EM currencies fell 0.1 percent, while the EM Asia equities gauge advanced more than 1 percent to a record high, led by South Korea’s tech-heavy KOSPI.
The Philippine peso declined as much as 0.8 percent in its biggest single-day decline since the end of April, while the South Korean won depreciated to a one-week low of 1,476.64 per US dollar. The dollar index rose to 98.003 after President Donald Trump swiftly rejected Iran’s response to a US peace proposal, calling it “totally unacceptable”, sparking a rally in oil prices.
Energy-dependent Asian economies are exposed to higher oil prices and the stronger inflation and strained economic growth that can result.
“Geopolitical developments will keep policymakers cautious, particularly with the external pressures across the region becoming more differentiated,” said Lavanya Venkateswaran, a senior ASEAN economist at OCBC Bank, adding that both price and external risks were emerging for regional central banks.
The Indonesian rupiah hovered a few points shy of its record low of 17,445 against the dollar, while the equities pared losses to trade 0.3 percent down after slumping as much as 1.8 percent earlier in the session following Indonesia’s decision to delay plans to impose higher royalties and export duties on minerals.
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