Asian Currencies Fall as Fed Hike Bets Rise with Oil Prices Surging

Emerging Asian currencies and stocks declined on Monday as investors increased bets that the US Federal Reserve could raise interest rates in September. The surge in oil prices amid escalating U.S.-Iran tensions weighed heavily on energy-importing economies, exacerbating trade and inflation pressures.

The MSCI emerging market currency index remained largely unchanged in Singapore afternoon trading after hawkish comments from Fed Chair Kevin Warsh pushed the dollar to a near two-week high. Warsh's remarks prompted markets to price in roughly a 57% chance of a rate hike in September, reducing expectations for a weaker dollar and putting pressure on emerging-market currencies.

The Indonesian rupiah fell 0.3% to 17,755 per dollar but remained on track for a 1.4% monthly gain, which would be its strongest monthly performance since May 2025. The Philippine peso declined 0.3% and traded near a record low, while the Thai baht was little changed after touching a two-week low.

However, the South Korean won gained 0.5%, taking its year-to-date advance to about 5.1%. It also headed for a second consecutive monthly gain, supported by strong semiconductor exports.