Asia Currencies Plumb Fresh Lows as Gulf Conflict Continues

By Kimberley Kao and Amanda Lee

Emerging-market currencies in Asia hit new lows on Monday as Middle East hostilities continue to sour investor risk appetite.

The Philippine peso, Indonesian rupiah and Indian rupee all touched record intraday lows against the dollar in the first trading day of the week. The peso sank to 59.685 to the greenback, while the rupiah and rupee weakened to 16,990 and 92.3510, respectively, according to LSEG data.

"Global markets are firmly in risk‑off mode," said Lloyd Chan, senior currency analyst at MUFG Bank.

The flight to safety has strengthened the greenback, with the U.S. dollar index up 0.6%.

Earlier, worries about the continued conflict and disruptions to critical shipping routes pushed oil past $100 a barrel, fanning inflationary risks for Asia's energy importers.

Economies that lean heavily on Middle East production are particularly vulnerable, analysts say, though policymakers have varying means with which to soften the blow, including subsidies and oil reserves.

The spike in oil and gas prices poses a "stagflationary" shock for economies like South Korea, India and the Philippines, Citi Research analysts said in a note, referring to a state characterized by stagnant growth and high inflation.

Net energy exporters such as Malaysia, and to a degree, Indonesia, are comparatively cushioned, Citi said. But those buffers are fraying as currencies weaken and equity markets tumble.

Indonesia's Jakarta Composite Index slid over 5% during Monday trade and was last 2.6% lower, while Malaysia's benchmark index was down 2.3%, India's Sensex was 2.5% lower and the Philippines' main index was off by 5.0%.

The threat posed to Asian markets is not just about higher oil prices but a potential looming energy shortage, MUFG's Michael Wan wrote in a report.

A prolonged closure of the Strait of Hormuz would disproportionately affect Asia as around 80% of the oil and gas that flows through the waterway is destined for the region's economies.

If the hostilities continue, central banks' reactions will be in focus as policymakers grapple with a possible inflation spiral and depreciating currencies.

"The most likely initial reaction will be to warn of inflation risks and wait before any policy change takes place," with an eye on core inflation over the next three to six months before responding to the energy price shock, said Olle Holmgren, chief Sweden strategist at SEB Research.

Write to Kimberley Kao at kimberley.kao@wsj.com and Amanda Lee at amanda.lee@wsj.com

(END) Dow Jones Newswires

March 09, 2026 03:15 ET (07:15 GMT)