Asian Currencies Suffer as Oil Prices Bite and Dollar Gains

A Reuters poll has found that investors remain bearish on most emerging Asian currencies due to high oil prices and rising US yields. The survey, which polled 10 respondents, showed short positions on several currencies, including the rupiah, Thai baht, and Indian rupee, at their highest since late July.

Elevated oil prices are threatening to widen external deficits and fuel inflation in net energy-importing economies. The US dollar's appeal has been boosted by rising US yields, which have reached a 22-year high. Higher oil prices are likely to erode the current-account buffers of net oil-importing economies.

J Jeff Ng, head of Asia macro strategy at SMBC, noted that the Indian rupee, Philippine peso, and rupiah were among the most vulnerable currencies due to their exposure to rising oil prices and surging global bond yields. The Bank of Thailand's policy rate stands at just 1%, providing little support for the Thai baht.