Oil Price Spike Hits Emerging Asia Currencies and AI Stocks Hard
Crude oil prices surged more than 3% after strikes in Saudi Arabia and attacks on ships in the Gulf, putting pressure on emerging Asia's currencies. The US dollar also firmed up, making it less attractive to hold riskier emerging-market assets.
The Philippine peso took the hardest hit, sliding to a record 62.825 per US dollar, while Indonesia's rupiah and Taiwan's dollar also weakened due to increased trade gaps and foreign currency demand.
South Korea's KOSPI fell 2.8% as leaders at OpenAI and Anthropic called for slowing AI development, and Taiwan's benchmark slipped as chip heavyweights, including TSMC, dropped in value.
The combination of higher oil prices and US interest rates can create a 'double squeeze' for net importers like the Philippines and Indonesia, making it challenging for their currencies to hold up even if local economic news is quiet.