Asian currencies dragged lower by oil spike, with Fed path and Middle East trajectory key risks ahead
But analysts say energy prices are unlikely to shape the region’s currency trajectory over a sustained period
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[SINGAPORE] Escalating tensions in the Middle East have pushed major Asian currencies lower against the US dollar over the past week, as oil prices surged and investors sought the greenback as a safe haven.
However, analysts said energy prices – the main transmission channel through which the conflict involving Iran, the United States and Israel affects the global economy – are unlikely to shape the region’s currency trajectory over a sustained period.
“Unless the shock is severe and sustained, we do not expect energy prices to influence the region’s medium-term currency path,” said Vishrut Rana, a senior economist at S&P Global Ratings.
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