Asian currencies, stocks slide during vigil over Iran retaliation
Emerging Asian currencies and equities fell on Monday as fears of retaliation by Iran following US strikes.
SINGAPORE/HONG KONG: 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 per cent and regional currencies weakened, with the Philippine peso and Thai baht declining 0.8 per cent and 0.6 per cent, respectively.
The units were on track for their lowest levels since April 9 and May 20, respectively. Taiwan's dollar lost 0.4 per cent and the South Korean won shed 0.6 per cent. The Indonesian rupiah fell 0.6 per cent, 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 per cent.
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 per cent, tracking regional peers, despite Malaysia's position as the only net oil and gas exporter among major emerging Asian economies.
Stock markets across the region also fell. MSCI's gauge of Asian emerging market equities slid 1.3 per cent.
Thailand's benchmark index declined as much as 1.3 per cent on Monday, hitting its lowest level in over five years ahead of the Bank of Thailand's policy meeting later this week, where the central bank is expected to hold rates amid political and trade uncertainty.
The local political landscape has been fraught after the Bhumjaithai Party exited the ruling coalition last week, prompting other allies to reconsider their support.
Prime Minister Paetongtarn Shinawatra, who is facing growing calls to resign, said on Sunday that all coalition partners had pledged support and vowed to maintain political stability to counter threats to national security.
Equities in the Philippines dropped more than 2 per cent to hit their lowest since April 25, while Taiwan stocks fell as much as 2.2 per cent. Indonesian shares shed 1.4 per cent and hit their lowest since April 30.
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