BENGALURU (Sept 14): Emerging Asian currencies slipped on Monday as higher oil prices weighed on energy importers, while South Korean and Taiwanese shares fell on growing concerns over the outlook for artificial intelligence (AI).
The MSCI gauge of emerging-market currencies fell 0.1% as the dollar strengthened against major peers.
Oil prices climbed more than 3% after fresh strikes in Saudi Arabia and attacks on ships in the Gulf rattled markets, adding to concerns about disruptions to global energy supplies.
Higher oil prices are generally a headwind for emerging Asian economies that are mostly net energy importers, as they raise import bills, pressure external balances and weigh on regional currencies.
The Philippine peso weakened to a record low of 62.831 per US dollar, marking its third all-time low this month.
“The Philippines is acutely exposed as a major oil importer that sourced almost all its crude from the Gulf before the war, meaning every leg higher in oil translates directly into a wider trade deficit and more peso selling,” said Inki Cho, a senior financial market strategist at online trading platform Exness.
The Indonesian rupiah and the Taiwan dollar slipped 0.3% and 0.4% respectively. The South Korean won, the region’s best-performing currency this year, shed 0.4%.
Robust semiconductor exports have pushed South Korea’s current account surplus to record levels this year, providing a steady stream of dollar inflows that have made the won more resilient to rising oil prices than many of its regional counterparts.
Investors are now awaiting the Federal Reserve’s policy decision on Wednesday, with swaps pricing in an 86% chance of a 25-basis-point rate hike, the CME FedWatch tool showed.
“A hike would reinforce dollar strength and compress the yield differential that makes emerging Asia assets attractive to global capital. For oil-importing economies like the Philippines and Indonesia, that means a double squeeze,” said Cho.
The MSCI EM Asia equities index fell as much as 1.7% to its lowest level since late August, weighed down by a 3.3% drop in South Korea’s Kospi, a key gauge of AI-related investment sentiment.
The losses came after the heads of OpenAI and Anthropic called for a slowdown in AI development to better manage the technology’s risks.
Taiwan’s benchmark index also shed 0.7%, dragged lower by a 1.2% decline in chip manufacturing giant TSMC.
Elsewhere, Indonesian stocks shed as much as 1.9% to their lowest level in more than two weeks, while Thailand’s benchmark lost 0.6%.
Equity markets in Manila and Kuala Lumpur, however, rose 0.2% and 0.5%, respectively.
The Nikkei ended 0.8% lower. Investors also await the Bank of Japan’s policy decision on Friday, with markets implying around a 77% chance the central bank will lift its cash rate by a quarter point to 1.25%.
The BOJ is also expected to sound hawkish on further tightening as it struggles to prevent a relapse in the yen after market intervention helped pull it back from a 40-year low. The currency was down 0.5%.
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